To prepare a master (or static) budget for April, May, and June 2017, management gathers the following information:

a. Sales for March total 20,500 units. Forecasted sales in units are as follows: April, 20,500; May, 19,500; June, 20,000; and July, 20,500. Sales of 240,000 units are forecasted for the entire year. The products selling price is $23.85 per unit and its total product cost is $19.85 per unit.

b. Company policy calls for a given months ending raw materials inventory to equal 50% of the next months materials requirements. The March 31 raw materials inventory is 4,925 units, which complies with the policy. The expected June 30 raw materials inventory is 4,000 units. Raw materials cost $20 per unit. Each finished unit requires 0.50 units of raw materials.

c. Company policy calls for a given months ending finished goods inventory to equal 80% of the next months expected sales. The March 31 finished goods inventory is 16,400, which complies with the policy.

d. Each finished unit requires 0.50 hour of direct labor at a rate of $15 per hour.

e. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $2.70 per direct labor hour. Depreciation of $20,000 per month is treated as fixed factory overhead.

f. Sales representative commissions are 8% of sales and are paid in the month of the sales. The sales managers monthly salary is $3,000.

g. Monthly general and administrative expenses include $12,000 administrative salaries and 0.9% monthly interest on the long-term nots payable.

Static Budgets Homework Handout PROBLEM 22-4A (pages 978-979 in Fundamental Accounting Principles, 23 ed.) The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017 Zigby Manufacturing Estimated Balance Sheet March 31, 2017 Assets Liabilities &Equity Cash Accounts receivable Raw materials inventory Finished goods inventory Total current assets Equipment, gross Accumulated depreciation(150,000) Retained earnings Equipment, net Total assets $200,500 12,000 212,500 500,000 712,500 335,000 208,788 543,788 1,256,288 Total liabilities & equity $1,256,288 40,000 Accounts payable 342,248 Short-term notes payable 98,500 Total current liabilities 25,540 Long-term notes payable 806,288 Total liabilities 600,000 C ommon stock 50,000 Total stockholders' equity