The management of Zigby Manufacturing prepared the following balance sheet for March 31 Assets 2GBY MANUFACTURING lance Sheet March 31 Liabilities and Equity $ 40,00 Lilities 346,400 Accounts payable 98.50 Loan payable 325,20 Long-term note payable Equity 450.000 Common stock Retained earnings 51.25 GO Total 11 abilities and equity Accounts receivable aterials inventory Finished goods Inventory huipent Les Accumulated depreciation $ 201,00 12, $ 13,000 50,000 250.ee 335, 210, 440 545,440 51,258,460 Total assets To prepare a master budget for April May, and June, management gathers the following information a. Sales for March total 20,500 units. Budgeted sales in units follow. April, 20.500: May 19,500: June 20,000, and July, 20,500. The product's selling price is $24.00 per unit and its total product cost is $19.85 per unit b. Raw materials inventory consists solely of direct materials that cost $20 per pound Company policy calls for a given month's ending materials inventory to equal 50% of the next month's direct materials requirements. The March 31 raw materials inventory is 4.925 pounds. The budgeted June 30 ending raw materials inventory is 4.000 pounds. Each finished unit requires 0.50 pound of direct materials c. Company policy calls for a given month's ending finished goods inventory to equal 80% of the next month's budgeted unit sales. The March 31 finished goods inventory is 16,400 units. d. Each finished unit requires 0.50 hour of direct labor at a rate of $15 per hour e. The predetermined variable overhead rate is $2.70 per direct labor hour Depreciation of 20.000 per month is the only fixed factory overhead Item 4. Sales commissions of 8% of sales are paid in the month of the sales. The sales manager's monthly salary is $3,000. 9. Monthly general and administrative expenses include $12,000 for administrative salaries and 0.995 monthly interest on the long- term note payable I. The company budgets 30% of sales to be for cash and the remaining 70% on credit Credit sales are coilected in full in the month following the sale (no credit seles are collected in the month of sale) 1. All raw materials purchases are on credit, and accounts payable are solely tied to raw materials purchases, Raw materials purchases are fully paid in the next month (none are paid in the month of purchase 1. The minimum ending cash balance for all months is $40,000. If necessary, the company borrows enough cash using a loan to reach the minimum. Loans require an interest payment of 19 at each month-end (oefore any repayment). If the month-end preliminary cash balance exceeds the minimum, the excess wll be used to repay any loans k. Dividends of $10,000 are budgeted to be declared and paid in May 1. No cash payments for income taxes are budgeted in the second calendar Quartet income tax will be assessed at 35% in the quarter and budgeted to be paid in the third calendar Quarter m. Equipment purchases of $100.000 are budgeted for the last day of June. Required: Prepare the following budgets for the months of April, May, and June: 1. Sales budget. 2. Production budget. 3. Direct materials budget. 4. Direct labor budget. 5. Factory overhead budget. 6. Selling expense budget. 7. General and administrative expense budget. 8. Schedule of cash receipts. 9. Schedule of cash payments for direct materials. 10. Cash budget. 11. Budgeted income statement for entire second quarter (not monthly). 12. Budgeted balance sheet at June 30. ZIGBY MANUFACTURING Sales Budgets April May June Budgeted sales units Selling price per unit Total budgeted sales S OS 0 S o ZIGBY MANUFACTURING Production Budget April May June Total 19.500 20.000 20.500 8096 8096 8096 Budgeted sales units Calculation of desired ending inventory Next period budgeted sales units Ratio of inventory to future sales Add: Desired ending inventory Total required units Less: Beginning inventory units Units to produce ZIGBY MANUFACTURING Direct Materials Budget April May June Units to produce Matenals requirements per unit (pounds) Materials needed for production (pounds Add: Desired ending inventory Total materials required (pounds) Less: Beginning materials inventory Materials to purchase (pounds) Materials cost per pound Cost of direct materials purchases ZIGBY MANUFACTURING Direct Labor Budget April May June Total Units to produce Direct labor hours required per unit Direct labor hours needed Direct labor cost per hour Cost of direct labor June Total ZIGBY MANUFACTURING Factory Overhead Budget April May Direct labor hours needed Variable overhead rate per direct labor hour Budgeted variable overhead Budgeted foxed overhead Budgeted total factory overhead ZIGBY MANUFACTURING Selling Expense Budget April May June Budgeted sales Sales commission percent Sales commissions Sales salaries Total selling expenses ZIGBY MANUFACTURING General and Administrative Expense Budget April May June $ O Administrative salaries interest on long-term note 0 Total general and administrative expenses s 0 June May 468.000 5 S 480.000 ZIBGY MANUFACTURING Schedule of Cash Receipts April Sales S 492.000 Cash receipts from Cash sales Collections of prior period sales Total cash receipts S os 05 June S $ 182,000 Schedule of Cash Payments for Direct Materials April May Materials purchases S 198.000 201.500 Cash payments for Current period purchases Prior period purchases Total cash payments OS 05 $ Cash Budget April May June Beginning cash balance Add: Cash receipts from sales Total cash available Less: Cash payments for 2 Total cash payments Preliminary cash balance Ending cash balance Loan balance April May June Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month ZIGBY MANUFACTURING Budgeted Income Statement For Three Months Ended June 30 Selling general and administrative expenses Total operating expenses 0 0 ZIGBY MANUFACTURING Budgeted Balance Sheet June 30 Assets Total ourrent assets Equipment, net Total assets Liabilities and Equity Liabilities Bank loan payable Total current liabilities Equity Total Equity Total Liabilities and Equity