To prepare a master budget for April, May, and June of 2017, management gathers the following information: a. Sales for March total 22,500 units. Forecasted sales in units are as follows: April, 22,500; May, 19,500; June, 21,700; and July 22,500. Sales of 254,000 units are forecasted for the entire year. The product's selling price is $22.50 per unit and its total product cost is $18.50 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 5,025 units, which complies with the policy. The expected June 30 ending raw materials inventory is 5,400 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 18,000 units, which complies with the policy. d. Each finished unit requires 0.50 hours of direct labor at a rate of $10 per hour e. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $4.10 per direct labor hour. Depreciation of $30,790 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 $4,400 g. Monthly general and administrative expenses include $26,000 administrative salaries and 0.5% 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 $54,000. 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 $24,000 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 40% in the quarter and paid in the third calendar quarter. m. Equipment purchases of $144,000 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 materia ls 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 Complete this question by entering your answers in the tabs below. 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 2017 Budgeted Unit Sales Budgeted Unit Price Budgeted Sales Dollars April 2017 May 2017 June 2017 Totals for the second quarter Production budget. ZIGBY MANUFACTURING Production Budget April, May, and June 2017 April May June Next month's budgeted sales (units) 19,500 21,700 22,500 Ratio of inventory to future sales 80% 80% 80% Required units of available production Units to be produced Raw materials budget. (Round per unit values to 2 decimal places.) ZIGBY MANUFACTURING Raw Materials Budget April, May, and June 2017 April May June Production budget (units) Materials needed for production Total materials requirements (units) Materials to be purchased Material price per unit Budgeted raw material purchases Direct labor budget. (Round per unit values to 2 decimal places.) ZIGBY MANUFACTURING Direct Labor Budget April, May, and June 2017 April May June Total Budgeted production (units) Total labor hours needed 0 Budgeted direct labor cost Factory overhead budget. (Round per unit values to 2 decimal places.) ZIGBY MANUFACTURING Factory Overhead Budget April, May, and June 2017 April May June Total Labor hours needed Budgeted variable overhead Budgeted fixed overhead Budgeted total overhead Selling expense budget. ZIGBY MANUFACTURING Selling Expense Budget April, May, and June 2017 April May June Budgeted sales Sales commissions General and administrative expense budget ZIGBY MANUFACTURING General and Administrative Expense Budgets April, May, and June 2017 May June April Total budgeted G&A expenses Cash budget. (Negative balances and Loan repayment amounts (if any) should be indicated Calculation of Cash receipts from customers: April May June Total budgeted sales Cash sales Sales on credit 30% 70% Total cash receipts from customers April May June Current month's cash sales Collections of receivables April, May, and June 2017 April May June Beginning cash balance Total cash available Cash payments for: Total cash payments 0 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, 2017 Operating expenses Total operating expenses 0 EA ZIGDT MIANUPACTURING Budgeted Balance Sheet June 30, 2017 Assets Total current assets $ Equipment, net Total assets Liabilities and Equity 0 Liabilities Total current liabilities Stockholders' Equity Total Stockholders' Equity Total Liabilities and Equity To prepare a master budget for April, May, and June of 2017, management gathers the following information: a. Sales for March total 22,500 units. Forecasted sales in units are as follows: April, 22,500; May, 19,500; June, 21,700; and July 22,500. Sales of 254,000 units are forecasted for the entire year. The product's selling price is $22.50 per unit and its total product cost is $18.50 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 5,025 units, which complies with the policy. The expected June 30 ending raw materials inventory is 5,400 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 18,000 units, which complies with the policy. d. Each finished unit requires 0.50 hours of direct labor at a rate of $10 per hour e. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $4.10 per direct labor hour. Depreciation of $30,790 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 $4,400 g. Monthly general and administrative expenses include $26,000 administrative salaries and 0.5% 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 $54,000. 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 $24,000 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 40% in the quarter and paid in the third calendar quarter. m. Equipment purchases of $144,000 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 materia ls 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 Complete this question by entering your answers in the tabs below. 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 2017 Budgeted Unit Sales Budgeted Unit Price Budgeted Sales Dollars April 2017 May 2017 June 2017 Totals for the second quarter Production budget. ZIGBY MANUFACTURING Production Budget April, May, and June 2017 April May June Next month's budgeted sales (units) 19,500 21,700 22,500 Ratio of inventory to future sales 80% 80% 80% Required units of available production Units to be produced Raw materials budget. (Round per unit values to 2 decimal places.) ZIGBY MANUFACTURING Raw Materials Budget April, May, and June 2017 April May June Production budget (units) Materials needed for production Total materials requirements (units) Materials to be purchased Material price per unit Budgeted raw material purchases Direct labor budget. (Round per unit values to 2 decimal places.) ZIGBY MANUFACTURING Direct Labor Budget April, May, and June 2017 April May June Total Budgeted production (units) Total labor hours needed 0 Budgeted direct labor cost Factory overhead budget. (Round per unit values to 2 decimal places.) ZIGBY MANUFACTURING Factory Overhead Budget April, May, and June 2017 April May June Total Labor hours needed Budgeted variable overhead Budgeted fixed overhead Budgeted total overhead Selling expense budget. ZIGBY MANUFACTURING Selling Expense Budget April, May, and June 2017 April May June Budgeted sales Sales commissions General and administrative expense budget ZIGBY MANUFACTURING General and Administrative Expense Budgets April, May, and June 2017 May June April Total budgeted G&A expenses Cash budget. (Negative balances and Loan repayment amounts (if any) should be indicated Calculation of Cash receipts from customers: April May June Total budgeted sales Cash sales Sales on credit 30% 70% Total cash receipts from customers April May June Current month's cash sales Collections of receivables April, May, and June 2017 April May June Beginning cash balance Total cash available Cash payments for: Total cash payments 0 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, 2017 Operating expenses Total operating expenses 0 EA ZIGDT MIANUPACTURING Budgeted Balance Sheet June 30, 2017 Assets Total current assets $ Equipment, net Total assets Liabilities and Equity 0 Liabilities Total current liabilities Stockholders' Equity Total Stockholders' Equity Total Liabilities and Equity
