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

ZIGBY MANUFACTURING
Balance Sheet
March 31
Assets			Liabilities and Equity
Cash		$ 50,000	Liabilities
Accounts receivable		386,400	Accounts payable	$ 196,600
Raw materials inventory		84,200	Loan payable	12,000
Finished goods inventory		368,000	Long-term note payable	500,000	$ 708,600
Equipment	$ 602,000		Equity
Less: Accumulated depreciation	151,000	451,000	Common stock	336,000
			Retained earnings	295,000	631,000
Total assets		$ 1,339,600	Total liabilities and equity		$ 1,339,600

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

1. Sales for March total 23,000 units. Budgeted sales in units follow: April, 23,000; May, 15,300; June, 20,400; and July, 23,000. The products selling price is $24.00 per unit and its total product cost is $20.00 per unit.
2. 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 4,210 pounds. The budgeted June 30 ending raw materials inventory is 4,100 pounds. Each finished unit requires 0.50 pound of direct materials.
3. 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 18,400 units.
4. Each finished unit requires 0.50 hour of direct labor at a rate of $15 per hour.
5. The predetermined variable overhead rate is $2.80 per direct labor hour. Depreciation of $21,523 per month is the only fixed factory overhead item.
6. Sales commissions of 10% of sales are paid in the month of the sales. The sales managers monthly salary is $3,100.
7. Monthly general and administrative expenses include $13,000 for administrative salaries and 0.5% monthly interest on the long-term note payable.
8. 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).
9. 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).
10. The minimum ending cash balance for all months is $50,000. 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.
11. Dividends of $11,000 are budgeted to be declared and paid in May.
12. 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.
13. 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.

• Req 1
• Req 2
• Req 3
• Req 4
• Req 5
• Req 6
• Req 7
• Req 8 to 10
• Req 11
• Req 12

Sales budget.

ZIGBY MANUFACTURING
Sales Budgets
	April	May	June
Budgeted sales units
Selling price per unit
Total budgeted sales	$0	$0	$0

Production budget.

ZIGBY MANUFACTURING
Production Budget
	April	May	June	Total
Budgeted sales units
Calculation of desired ending inventory
Next period budgeted sales units	15,300	20,400	23,000
Ratio of inventory to future sales	80%	80%	80%
Total required units
Units to produce

Raw materials budget. (Round per unit values to 2 decimal places.)

ZIGBY MANUFACTURING
Direct Materials Budget
	April	May	June
Units to produce
Materials needed for production (pounds)
Total materials required (pounds)
Materials to purchase (pounds)
Materials cost per pound
Cost of direct materials purchases