The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2019. ZIGBY MANUFACTURING Estimated Balance Sheet March 31, 2019 Assets Cash Accounts receivable Raw materials inventory Finished goods inventory Total current assets Equipment Accumulated depreciation Equipment, net Total assets Liabilities and Equity Accounts payable Short-term notes payable Total current liabilities Long-term note payable Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and equity $ 80,000 364,000 96,000 364,800 904,800 610,000 (155,000) 455,000 $1,359,800 $ 195,500 17,000 212,500 510,000 722,500 340,000 297,300 637, 300 $1,359,800 To prepare a master budget for April, May, and June of 2019, management gathers the following information. a. Sales for March total 20,000 units. Forecasted sales in units are as follows: April, 20,000; May, 19,000; June, 19,500; and July, 20,000. Sales of 245,000 units are forecasted for the entire year. The product's selling price is $26.00 per unit and its total product cost is $22.80 per unit. b. Company policy calls for a given month's ending raw materials inventory to equal 50% of the next month's materials requirements. The March 31 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. c. Company policy calls for a given month's ending finished goods inventory to equal 80% of the next month's expected unit sales. The March 31 finished goods inventory is 16,000 units, which complies with the policy. 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. Depreciation of $23,400 per month is treated as fixed factory overhead. f. Sales representatives' commissions are 6% of sales and are paid in the month of the sales. The sales manager's monthly salary is $3,500. g. Monthly general and administrative expenses include $17,000 administrative salaries and 0.9% monthly interest on the long-term note payable. 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 following the sale (none are 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 $45,000. If necessary, the company borrows enough cash using a short-term note to reach the minimum. Short-term notes require an interest payment of 1% at each month-end (before any repayment). If the ending cash balance exceeds the minimum, the excess will be applied to repaying the short-term notes payable balance. k. Dividends of $15,000 are to be declared and paid in May. 1. No cash payments for income taxes are to be made during the second calendar quarter. Income tax will be assessed at 35% in the quarter and paid 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 calculations up to the nearest whole dollar, except for the amount of cash sales, which should be rounded down to the nearest whole dollar.): 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. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 Required 9 Required 10 Sales budget. (Round Budgeted unit price to 2 decimal places.) ZIGBY MANUFACTURING Sales Budget April, May, and June 2019 Budgeted Budgeted Budgeted Unit Sales Unit Price Sales Dollars April 2019 20,000 $ 26.00 $ 520,000 May 2019 19,000 26.00 494,000 June 2019 19,500 26.00 507,000 Totals for the second quarter 58,500 $ 1,521,000 Total ZIGBY MANUFACTURING Production Budget April, May, and June 2019 April May Next month's budgeted sales (units) 19,000 19,500 Ratio of inventory to future sales 80% 80% Budgeted ending inventory (units) 15,200 15,600 Budgeted units sales for month 20,000 19,000 Required units of available production 35,200 34,600 Beginning inventory (units) 16,000 15,200 Units to be produced 19,200 19,400 June 20,000 80% 16,000 19,500 35,500 15,600 19,900 58,500 Total ZIGBY MANUFACTURING Raw Materials Budget April, May, and June 2019 April May Production budget (units) 19,200 19,400 Materials requirements per unit 0.50 0.50 Materials needed for production 9,600 9,700 Budgeted ending inventory 4,850 4,975 Total materials requirements (units) 14,450 14,675 Beginning inventory 4,800 4,850 Materials to be purchased 9,650 9 ,825 Material price per unit $ 20 $ 20 Budgeted raw material purchases $ 193,000 $ 196,500 June 19,900 0.50 9,950 4,500 14,450 4,975 9,475 20 189,500 $ $ $ $ 28,950 20 579,000 Total ZIGBY MANUFACTURING Direct Labor Budget April, May, and June 2019 April May Budgeted production (units) 19,200 19,400 Labor requirements per unit (hours) 0.50 0.50 Total labor hours needed 9,600 9,700 Direct labor rate (per hour) $ 20 $ 20 Budgeted direct labor cost $ 192,000 $ 194,000 June 19,900 0.50 9,950 20 199,000 $ $ $ $ 29,250 20 585,000 Total Labor hours needed Variable factory overhead rate Budgeted variable overhead Budgeted fixed overhead ZIGBY MANUFACTURING Factory Overhead Budget April, May, and June 2019 April May 9,600 9,700 $ 3.20 $ 3.20 $ 30,720 $ 31,040 23,400 23,400 $ 54,120 $ 54,440 $ $ June 9,950 3.20 31,840 23,400 55,240 $ 93,600 70,200 163,800 Budgeted total overhead $ $ Total ZIGBY MANUFACTURING Selling Expense Budget April, May, and June 2019 April May $ 520,000 $ 494,000 6% 6% $ 31,200 $ 29,640 3,500 3,500 $ 34,700 $ 33,140 Budgeted sales Sales commission percent Sales commissions Sales salaries Total budgeted selling expenses $ June 507,000 6% 30,420 3,500 33,920 $ $ 91,260 10,500 101,760 $ $ ZIGBY MANUFACTURING General and Administrative Expense Budget April, May, and June 2019 April May Salaries $ 17,000 $ 17,000 $ Interest on long-term note 4,590 4,590 Total budgeted G&A expenses | $ 21,590 $ 21,590 $ June 17,000 $ 4,590 21,590 $ Total 51,000 13,770 64,770 Calculation of Cash receipts from customers: $ $ $ Total budgeted sales Cash sales Sales on credit April 520,000 156,000 364,000 May 494,000 148,200 345,800 June 507,000 152,100 354,900 30% 70% $ $ $ Current month's cash sales Collections of receivables Total cash receipts Total cash receipts from customers April $ 156,000 $ 364,000 $ 520,000 $ May 148,200 $ 364,000 512,200 $ June 152,100 345,800 497,900 Cash Budget April, May, and June 2019 April $ 80,000 520,000 600,000 $ $ Beginning cash balance Cash receipts from customers Total cash available May 108,320 512,200 620,520 June 132,750 497,900 630,650 196,500 Cash payments for: Raw materials Direct labor Variable overhead General & administrative salaries Sales commissions Sales salaries Loan interest Dividends Purchases of equipment Long-term note interest 195,500 192,000 30,720 17,000 31,200 3,500 170 193,000 194,000 31,040 17,000 29,640 3,500 199,000 31,840 17,000 30,420 3,500 15,000 135,000 4,590 4,590 487,770 132,750 Total cash payments Preliminary cash balance Additional loan (loan repayment) Ending cash balance 474,680 125,320 17,000 108,320 617,850 12,800 32,200 45,000 | $ $ 132,750 $ Loan balance April May $ 0 $ Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month June 0 32,200 32,200 0 $ 0 $ $ 1,521,000 1,333,800 187,200 ZIGBY MANUFACTURING Budgeted Income Statement For Three Months Ended June 30, 2019 Sales Cost of goods sold Gross profit Operating expenses Sales commissions $ 91,260 Sales salaries 10,500 General administrative salaries 51,000 Bank loan interest expense Long-term note interest 13,770 166,530 20,670 Total operating expenses Income before taxes Income tax Net income $ 20,670 Budgeted Balance Sheet June 30, 2019 Assets Cash Accounts receivable Raw materials inventory Finished goods inventory Total current assets Equipment Accumulated depreciation Equipment, net Total assets Liabilities and Equity Liabilities Accounts payable Bank loan payable Income taxes payable Total current liabilities Long-term note payable Stockholders' Equity Common stock Retained earnings Long-term note payable Stockholders' Equity Common stock Retained earnings Total Stockholders' Equity Total Liabilities and Equity