Problem 7-4A Manufacturing: Preparation of a complete master budget LO P1, P2, P3 The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017: ZIGBY MANUFACTURING Estimated Balance Sheet March 31, 2017 Asset:s Cash Accounts receivable Raw materials inventory Finished goods inventory Total current assets Equipment, gross Accumulated depreciation Equipment, net Total assets $80,000 364,090 96,000 364,806e 904,800 616,800 (155,000) 455,000 $1,359,800 Liabilities and Equity Accounts payable Short-term notes payable Total current liabilities Long-term note payable 195,500 17,000 212,500 510,000 722,500 Total liabilities 1 of 1 Ch Common stock Retained earnings Total stockholders' equity Total liabilities and equity 340,800 297,300 637,300 $1,359,880 To prepare a master budget for April, May, and June of 2017, management gathers the following information a. Sales for March total 20,000 units. Forecasted sales in units are as follows: Apri, 20.000; May, 19,000, June, 19,.5 20,000. Sales of 245,000 units are forecasted for the entire year. The product's selling price is $ cost is $22.80 per unit. 26.00 per unit and its total product b. Company policy calls for a given month's ending raw materials inventory to equal 50% of the next month's materials requirements. 1 raw materials inventory is 4,800 units, which complies with the policy. The expected June 30 ending raw materials inventory is 4,500 units. Raw materials cost $20 per unit. Each finished unit requires 0 50 units of raw materials The March 31 finished goods inventory is 16,000 units, which complies with the policy Depreciation of $23,400 per month is treated as fixed factory overhead $3,500 note payable following the sale (none are collected in the month of the sale), c. Company policy calls for a given month's ending finished goods invent tory to equal 80% of the next month's expected unit sales d. Each finished unit requires 0 50 hours of direct labor at a rate of $20 per hour e. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $3.20 per direct labor hour f. Sales representatives' commissions are 6% of sales and are paid in the month of the sales. The sales manager's monthly salary is g. Monthly general and administrative expenses include S17,000 administrative salaries and 09% monthly interest on the long-term h The company expects 30% of sales to be for cash and the remaining 70% on credit Receivables are collected in full in the month Check my i. All raw materials purchases are on credit, and no payables arise from any other transactions. One month's raw materials purchases are fully pald in the next month. j. The minimum ending cash balance for all months is $45,000. If necessary, the compan y borrows enough cash using a short-term if the note to reach the minimum short-term notes require an interest payment of 1% at each m onth-end before a ending cash balance exceeds the minimum, k. Dividends of $15,000 are to be declared and paid in May L. No cash payment the excess will be applied to repaying the short-term notes payable balance. y ep y ne stor income taxes are to be made during the second calendar quarter income tax will be assessed at 35% in the quarter and pald in the third calendar quarter m. Equipment purchases of $135,000 are budgeted for the last day of June Required: Prepare the following budgets and other financial information as required. All budgets and other financial information should be prepared for the second calendar quarter, except as otherwise noted below. (Round colculations up to the nearest whole dollar except for the amount of cash sales, which should be rounded down to the nearest whole doller.) 1. Sales budget 2. Production budget 3. Raw materials budget 4. Direct labor budget 5. Factory overhead budget. 6. Selling expense budget. 7. General and administrative expense budget 8. Cash budget 9. Budgeted income statement for the entire second quarter (not for each month separately) 10. Budgeted balance sheet