The management of Zigby Manufacturing prepared the following balance sheet for March 31 ZIGBY MANUFACTURING Balance Sheet March 31 Assets Liabilities and Equity Cash $ 54,000 Liabilities Accounts receivable 362,250 Accounts payable $ 212,200 Raw materials inventory 100,500 Loan payable 26,000 Finished goods inventory 333,000 Long term note payable 500,000 $ 738,200 Equipment $ 628,000 Equity Less Accumulated depreciation 164,000 464,000 Common stock 349,000 Retained earnings 226,550 575,550 Total assets $ 1,313,750 Total liabilities and equity $ 1,313,750 To prepare a master budget for April, May, and June, management gathers the following information Sales for March total 22,500 units Budgeted sales in units follow April, 22,500 May, 19,500 June, 21,700 and July, 22,500 The products selling price is $23 00 per unit and its total product cost is $18 50 per unit Raw materials inventory consists solely of direct materials that cost $20 per pound Company policy calls for a given months ending materials inventory to equal 50 of the next months direct materials requirements The March 31 raw materials inventory is 5,025 pounds The budgeted June 30 ending raw materials inventory is 5,400 pounds Each finished unit requires 0 50 pound of direct materials Company policy calls for a given months ending finished goods inventory to equal 80 of the next months budgeted unit sales The March 31 finished goods inventory is 18,000 units Each finished unit requires 0 50 hour of direct labor at a rate of $10 per hour The predetermined variable overhead rate is $4 10 per direct labor hour Depreciation of $30,788 per month is the only fixed factory overhead item Sales commissions of 6 of sales are paid in the month of the sales The sales managers monthly salary is $4,400 Monthly general and administrative expenses include $26,000 for administrative salaries and 0 5 monthly interest on the long term note payable The company budgets 30 of sales to be for cash and the remaining 70 on credit Credit sales are collected in full in the month following the sale (no credit sales are collected in the month of sale) 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) The minimum ending cash balance for all months is $54,000 If necessary, the company borrows enough cash using a loan to reach the minimum Loans require an interest payment of 1 at each month end (before any repayment) If the month end preliminary cash balance exceeds the minimum, the excess will be used to repay any loans Dividends of $24,000 are budgeted to be declared and paid in May No cash payments for income taxes are budgeted in the second calendar quarter Income tax will be assessed at 35 in the quarter and budgeted to be paid in the third calendar quarter 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 Factory overhead budget (Round variable overhead rate values to 2 decimal places ) ZIGBY MANUFACTURING Factory Overhead Budget April May June Total Direct labor hours needed Variable overhead rate per direct labor hour Budgeted variable overhead Budgeted fixed overhead Budgeted total factory overhead Selling expense budget ZIGBY MANUFACTURING Selling Expense Budget April May June Budgeted sales SEE NOTE 1 Sales commissions SEE NOTE 2 SEE NOTE 3 NOTE 1 OPTIONS SALES COMMISSION PERCENT SALES SALARIES TOTAL SELLING EXPENSES NOTE 2 OPTIONS SALES COMMISSION PERCENT SALES SALARIES TOTAL SELLING EXPENSES NOTE 3 OPTIONS SALES COMMISSION PERCENT SALES SALARIES TOTAL SELLING EXPENSES

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The management of Zigby Manufacturing prepared the following balance sheet for March 31. ZIGBY MANUFACTURING Balance Sheet March 31 Assets Liabilities and Equity Cash $

The management of Zigby Manufacturing prepared the following balance sheet for March 31.

ZIGBY MANUFACTURING
Balance Sheet
March 31
Assets			Liabilities and Equity
Cash		$ 54,000	Liabilities
Accounts receivable		362,250	Accounts payable	$ 212,200
Raw materials inventory		100,500	Loan payable	26,000
Finished goods inventory		333,000	Long-term note payable	500,000	$ 738,200
Equipment	$ 628,000		Equity
Less: Accumulated depreciation	164,000	464,000	Common stock	349,000
			Retained earnings	226,550	575,550
Total assets		$ 1,313,750	Total liabilities and equity		$ 1,313,750

To prepare a master budget for April, May, and June, management gathers the following information.

Sales for March total 22,500 units. Budgeted sales in units follow: April, 22,500; May, 19,500; June, 21,700; and July, 22,500. The products selling price is $23.00 per unit and its total product cost is $18.50 per unit.
Raw materials inventory consists solely of direct materials that cost $20 per pound. Company policy calls for a given months ending materials inventory to equal 50% of the next months direct materials requirements. The March 31 raw materials inventory is 5,025 pounds. The budgeted June 30 ending raw materials inventory is 5,400 pounds. Each finished unit requires 0.50 pound of direct materials.
Company policy calls for a given months ending finished goods inventory to equal 80% of the next months budgeted unit sales. The March 31 finished goods inventory is 18,000 units.
Each finished unit requires 0.50 hour of direct labor at a rate of $10 per hour.
The predetermined variable overhead rate is $4.10 per direct labor hour. Depreciation of $30,788 per month is the only fixed factory overhead item.
Sales commissions of 6% of sales are paid in the month of the sales. The sales managers monthly salary is $4,400.
Monthly general and administrative expenses include $26,000 for administrative salaries and 0.5% monthly interest on the long-term note payable.
The company budgets 30% of sales to be for cash and the remaining 70% on credit. Credit sales are collected in full in the month following the sale (no credit sales are collected in the month of sale).
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).
The minimum ending cash balance for all months is $54,000. If necessary, the company borrows enough cash using a loan to reach the minimum. Loans require an interest payment of 1% at each month-end (before any repayment). If the month-end preliminary cash balance exceeds the minimum, the excess will be used to repay any loans.
Dividends of $24,000 are budgeted to be declared and paid in May.
No cash payments for income taxes are budgeted in the second calendar quarter. Income tax will be assessed at 35% in the quarter and budgeted to be paid in the third calendar quarter.
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.

Factory overhead budget. (Round variable overhead rate values to 2 decimal places.)

ZIGBY MANUFACTURING
Factory Overhead Budget
	April	May	June	Total
Direct labor hours needed
Variable overhead rate per direct labor hour
Budgeted variable overhead
Budgeted fixed overhead
Budgeted total factory overhead