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The management of Zigby Manufacturing prepared the following estimated balance sheet for March, 2 0 1 3 : table [ [ Liabilities and Equity
The management of Zigby Manufacturing prepared the following estimated balance sheet for March, : tableLiabilities and EquityAccounts payable,Shortterm notes payable,Total current liabilities,$Longterm note payable,Total liabilities,Common stock,Retained earnings,Total stockholders' equity,Total liabilities and equity,$
To prepare a master budget for April, May, and June of management gathers the following information. a Sales for March total units. Forecasted sales in units are as follows: April,
; May, ; June, ; July, Sales of units are forecasted
for the entire year. The product's selling price is $ per unit and its total product
cost is $ per unit.
b Company policy calls for a given month's ending raw materials inventory to equal
of the next month's materials requirements. The March raw materials inventory is
units, which complies with the policy. The expected June ending raw
materials inventory is units. Raw materials cost $ per unit. Each finished unit
requires units of raw materials.
c Company policy calls for a given month's ending finished goods inventory to equal
of the next month's expected unit sales. The March finished goods inventory is
units, which complies with the policy
d Each finished unit requires hours of direct labor at a rate of $ per hour.
e Overhead is allocated based on direct labor hours. The predetermined variable
overhead rate is $ per direct labor hour. Depreciation of $ per month is
treated as fixed factory overhead.
f Sales representatives' commissions are of sales and are paid in the month of the
sales. The sales manager's monthly salary is $ per month.
g Monthly general and administrative expenses include $ administrative salaries
and monthly interest on the longterm note payable.
h The company expects of sales to be for cash and the remaining on credit.
Receivables are collected in full in the month following the sale none is collected in
the month of the sale
i All raw materials purchases are on credit, and no payables arise from any other
transactions. One month's raw materials purchases are fully paid in the next month.
J The minimum ending cash balance for all months is $ If necessary, the
company borrows enough cash using a shortterm note to reach the minimum. Short
term notes require an interest payment of at each monthend before any
repayment If the ending cash balance exceeds the minimum, the excess will be
applied to repaying the shortterm notes payable balance.
K Dividends of $ are to be declared and paid in May.
I. No cash payments for income taxes are to be made during the second calendar
quarter. Income tax will be assessed at in the quarter and paid in the third
calendar quarter.
m Equipment purchases of $ are budgeted for the last day of June. Selling expense budget.
tableZIGBY MANUFACTURINGSelling Expense Budget,April, May, and June Budgeted sales,April,May,June,Sales commissions,,,,General and administrative expense budget.
tabletableZIGBY MANUFACTURINGEstimated Balance SheetMarch AssetsCash$Accounts receivable,Raw materials inventory,Finished goods inventory,Total current assets,Equipment gross,Accumulated depreciation,Equipment net,Total assets,table$
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