The management of Zigby Manufacturing prepared the following estimated balance s

Question

The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017 ZIGBY MANUFACTURING Estinated Balance Sheet Narch 31, 2017 Assets Cash Accounts receivable Raw naterials inventory Pinished goods inventory Total current assets Equipment, gross Accumulated depreciation Equipment, net Total assets $ 44,000 500,000 90,200 44,000 1,078,200 608,000 (154,000 454,000 Print $1,532,200 Liabilities and Equity Accounts payable Short-tern notes payable Total current liabilities Loeg-ters note payable Total liabilities Common stock Retained earninga Total stockholders' equity Total liabilities and equity s 211,300 16,000 227,300 505 000 339,000 460,900 $1,532,200 To prepare a master budget for April, May, and June of 2017, management gathers the following information a. Sales for March total 25,000 units. Forecasted sales in units are as followS: April, 25,000: May. 16,300 June, 21100: and July b. Company policy calls for a given month's ending raw materials inventory to equal 50% of the next month's materials requirements. C Company policy calls for a given month's ending finished goods inventory to equal 80% of the next month's expected unit sales. d. Each finished unit requires 0.50 hours of direct labor at a rate of $19 per hour 25,000. Sales of 244,000 units are forecasted for the entire year. The product's selling price is $25.00 per unit and its total product cost is $22.20 per unit The March 31 raw materials inventory is 4,510 units, which complies with the policy. The expected June 30 ending raw materials inventory is 4,400 units, Raw materials cost $20 per unit. Each finished unit requires 0.50 units of raw materials The March 31 finished goods Inventory is 20,000 units, which complies with the policy Depreciation of $23,920 per month is treated as fixed factory overhead e. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $3.10 per direct labor hour. Sales representatives' commissions are 6% of sales and are paid in the month of the sales. The sales manager's monthly salary is $3.400. f. Prev1 of 1 E Next

Explanation / Answer

Sales Budget April May June Total Sales in Units                25,000                16,300                 21,100                62,400 Sp Per Unit                  25.00                   25.00                   25.00                   25.00 Total Sales in $              625,000              407,500              527,500          1,560,000 Cash Sales - 20%              125,000                81,500              105,500              312,000 Credit Sales - 80%              500,000              326,000              422,000          1,248,000 Schedule of Expected Cash Collections from Sales April May June Total Cash Sales - 20%              125,000                81,500              105,500              312,000 Collection from Accounts Receivables Accounts Receivable - Mar 31, 2017              500,000              500,000 April Sales              500,000              500,000 May Sales              326,000              326,000 June Sales                          -                            -   Total cash Collections              625,000              581,500              431,500          1,638,000 Merchandise Production Budget April May June Total Sales In units                25,000                16,300                 21,100                62,400 Add: Closing Inventory in units                13,040                16,880                 20,000                20,000 Total Needs                38,040                33,180                 41,100                82,400 Less: Beginning Inventory in uints              (20,000)              (13,040)              (16,880)              (20,000) Required Units Produced                18,040                20,140                 24,220                62,400 Direct Material Budget April May June Total Required Units Produced                18,040                20,140                 24,220                62,400 Raw Material required per Unit                     0.50                     0.50                     0.50                     0.50 Total Raw Material Required                  9,020                10,070                 12,110                31,200 Add: Ending Inventory                  5,035                   6,055                   4,400                   4,400 Total Needs                14,055                16,125                 16,510                35,600 Less: Beginning Inventory                (4,510)                (5,035)                 (6,055)                (4,510) Total Raw Material Purchased                  9,545                11,090                 10,455                31,090 Cost per Unit - Raw Material                        20                         20                         20                         20 Cost of Raw Material Purchased              190,900              221,800              209,100              621,800 Schedule of Cash payments to Suppliers April May June Total Cash Payment Accounts Payable - March 31, 2017              211,300              211,300 April Purchases              190,900              190,900 May Purchases              221,800              221,800 Total Cash Payment to Suppliers              211,300              190,900              221,800              624,000 Direct Labor Budget April May June Total Required Units Produced                18,040                20,140                 24,220                62,400 Direct Labor Hour per Unit                     0.50                     0.50                     0.50                     0.50 Total Direct Labor Hours Required                  9,020                10,070                 12,110                31,200 Cost per Direct Labor Hour                        19                         19                         19                         19 Direct Labor Cost              171,380              191,330              230,090              592,800 Manufacturing Overhead Budget April May June Total Variable Overhead - $3.10 per DLH                27,962                31,217                 37,541                96,720 Fixed Overhead - Depreciation                23,920                23,920                 23,920                71,760 Selling & Admn. Budget April May June Total Sales Comm. - 6%                37,500                24,450                 31,650                93,600 Sales Manager Salary                  3,400                   3,400                   3,400                10,200 Administrative Salaries                16,000                16,000                 16,000                48,000 Total                56,900                43,850                 51,050              151,800 Cash budget April May June Total Opening cash Balance                44,000              181,258              287,421                44,000 Add: receipts Collection from Customers              625,000              581,500              431,500          1,638,000 Total Cash available              669,000              762,758              718,921          1,682,000 Less: Disbursements Cash Disbursement - Accounts Payable              211,300              190,900              221,800              624,000 Payment of Direct Labor              171,380              191,330              230,090              592,800 Payment of Variable Overhead                27,962                31,217                 37,541                96,720 Selling & Admn. Exp.                56,900                43,850                 51,050              151,800 Purchase of Equipment                         -                            -                134,000              134,000 Dividend Paid                         -                  14,000                          -                  14,000 Interest on Long Term Notes                  4,040                   4,040                   4,040                12,120 Interest on Short Term Note Payable                      160                          -                           40                      200 Total Disbursement              471,742              475,337              678,561          1,625,640 Preliminary Cash Balance              197,258              287,421                 40,360                56,360 Add: Finance from Bank                         -                            -                     4,000                   4,000 Less: Payment to Bank              (16,000)                          -                            -                (16,000) Net Cash Balance Closing              181,258              287,421                 44,360                44,360 Answer 9. ZIGBY MANUFACTURING Budgeted Income Statement For Three Months Ended June 30, 2017 Sales          1,560,000 Cost of Goods Sold - 62,400 Units X $22.20          1,385,280 Gross Margin              174,720 Operating Expenses Sales Comm. - 6%                93,600 Sales Manager Salary                10,200 Administrative Salaries                48,000              151,800 Bank Interest Loan                      200 Total Operating Expenses              152,000 Net Operating Income                22,720 Interest on Long Term Notes                12,120 Net Income before Tax                10,600 Income Tax - 40%                   4,240 Net Income                   6,360 Answer 10. ZIGBY MANUFACTURING Budgeted Balance Sheet June 30, 2017 Assets Current Assets Cash                44,360 Accounts Receivable              422,000 Raw Material Inventory - 4,400 Units X $20                88,000 Finished Goods Inventory - 20,000 Units X $22.20              444,000 Total Current Assets              998,360 Property, Plant & Equipment Equipment              742,000 Accumulated Dep.           (225,760)              516,240 Total Assets          1,514,600 Liabilities & Stockholders' Equity Liabilities Current Liabilities Accounts Payable              209,100 Income Tax Payable                  4,240 Short Term Notes Payable                  4,000              217,340 Long Term Liabilities Long Term Notes Payable              505,000 Total Liabilities              722,340 Stockholders' Equity Common Stock              339,000 Retained Earnings              453,260 Total Stockholders' Equity              792,260 Total Liabilities & Stockholders' Equity          1,514,600                          -   Retained Earnings Statement June 30, 2017 Beginning Balance              460,900 Add: Net Income                  6,360 Sub-total              467,260 Less: Dividend Paid                14,000 Ending Balance              453,260

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