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Subject: Managerial AccountingCourse: 202: ACT

The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2019.

ZIGBY MANUFACTURING

Estimated Balance Sheet

March 31, 2019

Assets

Cash$59,000

Accounts receivable 487,500

Raw materials inventory 93,010

Finished goods inventory 433,000

Total current assets 1,072,510

Equipment 638,000

Accumulated depreciation (169,000)

Equipment, net 469,000

Total assets$1,541,510

Liabilities and Equity

Accounts payable $215,410

Short-term notes payable 31,000

Total current liabilities 246,410

Long-term note payable 530,000

Total liabilities 776,410

Common stock 354,000

Retained earnings 411,100

Total stockholders' equity 765,100

Total liabilities and equity $1,541,510

To prepare a master budget for April, May, and June of 2019, management gathers the following information.

1. Sales for March total 25,000 units. Forecasted sales in units are as follows: April, 25,000; May, 17,000; June, 22,400; and July, 25,000. Sales of 259,000 units are forecasted for the entire year. The product's selling price is $26.00 per unit and its total product cost is $21.65 per unit.
2. 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 4,650 units, which complies with the policy. The expected June 30 ending raw materials inventory is 5,900 units. Raw materials cost $20 per unit. Each finished unit requires 0.50 units of raw materials.
3. 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 20,000 units, which complies with the policy.
4. Each finished unit requires 0.50 hours of direct labor at a rate of $15 per hour.
5. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $4.60 per direct labor hour. Depreciation of $39,710 per month is treated as fixed factory overhead.
6. Sales representatives' commissions are 5% of sales and are paid in the month of the sales. The sales manager's monthly salary is $4,900.
7. Monthly general and administrative expenses include $34,000 administrative salaries and 0.8% monthly interest on the long-term note payable.
8. The company expects 25% of sales to be for cash and the remaining 75% on credit. Receivables are collected in full in the month following the sale (none are collected in the month of the sale).
9. 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.
10. The minimum ending cash balance for all months is $98,000. 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.
11. Dividends of $29,000 are to be declared and paid in May.
12. 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.
13. Equipment purchases of $149,000 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.

Complete this question by entering your answers in the tabs below.

Required 1

Sales budget. (Round Budgeted unit price to 2 decimal places.)

ZIGBY MANUFACTURING

Sales Budget

April, May, and June 2019

Budgeted Unit Sales Budgeted Unit Price Budgeted Sales Dollars

April 2019

May 2019

June 2019

Totals for the second quarter

Required 2

Production budget.

ZIGBY MANUFACTURING

Production Budget

April, May, and June 2019

April May June

Next month's budgeted sales (units) 17,000 22400 25,000 Ratio of inventory to future sales 80% 80% 80% Required units of available production

Units to be produced

Required 3

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

ZIGBY MANUFACTURING

Raw Materials Budget

April, May, and June 2019

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

Required 4

Direct labor budget. (Round per unit values to 2 decimal places.)

ZIGBY MANUFACTURING

Direct Labor Budget

April, May, and June 2019

April May June Total

Budgeted production (units)

Total labor hours needed 0

Budgeted direct labor cost

Required 5

Factory overhead budget. (Round per unit values to 2 decimal places.)

ZIGBY MANUFACTURING

Factory Overhead Budget

April, May, and June 2019

April May June Total

Labor hours needed

Budgeted variable overhead

Budgeted fixed overhead

Budgeted total overhead

Required 6

Selling expense budget.

ZIGBY MANUFACTURING

Selling Expense Budget

April, May, and June 2019

April May June

Budgeted sales

Sales commissions

Required 7

General and administrative expense budget.

ZIGBY MANUFACTURING

General and Administrative Expense Budget

April, May, and June 2019

April May June

?

?

Total budgeted G&A expenses

Required 8

Cash budget. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign.)

Calculation of Cash receipts from customers:

April May June

Total budgeted sales

Cash sales 25%

Sales on credit 75%

Total cash receipts from customers

April May June

Current month's cash sales

Collections of receivables

Total cash receipts

ZIGBY MANUFACTURING

Cash Budget April, May, and June 2019

April May June

Beginning cash balance

Total cash available

Cash payments for:

Total cash payments 0 0 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

Required 9

Budgeted income statement for the entire second quarter (not for each month separately). (Round your final answers to the nearest whole dollar.)

ZIGBY MANUFACTURING

Budgeted Income Statement

For Three Months Ended June 30, 2019

Operating expenses

Total operating expenses

Required 10

Budgeted balance sheet. (Round your final answers to the nearest whole dollar.)

ZIGBY MANUFACTURING

Budgeted Balance Sheet

June 30, 2019

Assets

Total current assets

Equipment, net

Total assets

Liabilities and Equity

Liabilities

Total current liabilities

Stockholders' Equity

Total Stockholders' Equity

Total Liabilities and Equity

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