The management of Zigby Manufacturing prepared the following estimated balance s
ID: 2436205 • Letter: T
Question
The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017: Estimated Balance Sheet $ 51,000 483,600 94,100 443,520 1,072,220 622,000 Pinished goods inventory Total current assets Accumulated depreciation (161,000) t, net 461,000 1,533,220 Short-tern notes payable Total current liabilities Long-term note payable Total liabilities Common stock 211,400 23,000 234,400 515,000 749,400 46,000 437,820 783,820 ined Total stockholders equity $1,533,220 To prepare a master budget for April, May, and June of 2017, management gathers the following information: a. Sales for March total 24,000 units. Forecasted sales in units are as follows: April, 24,000, May, 16,600; June, 22,200; 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 70% of the next month's expected unit sales. d Fach finiehed unit rensirns 0 50 hours of dirent lahor at a rate nf $26 nor hour 24,000. Sales of 251,000 units are forecasted for the entire year. The product's selling price is $31.00 per unit and its total product cost is $26.40 per unit The March 31 raw materials inventory is 4,705 units, which complies with the policy. The expected June 30 ending raw materials inventory is 5,100 units. Raw materials cost $20 per unit. Each finished unit requires 0.50 units of raw materials The March 31 finished goods inventory is 16,800 units, which complies with the policy. 1 of 1Explanation / Answer
Sales Budget April May June Total Sales in Units 24,000 16,600 22,200 62,800 Sp Per Unit 31.00 31.00 31.00 31.00 Total Sales in $ 744,000 514,600 688,200 1,946,800 Cash Sales - 35% 260,400 180,110 240,870 681,380 Credit Sales - 65% 483,600 334,490 447,330 1,265,420 Schedule of Expected Cash Collections from Sales April May June Total Cash Sales - 35% 260,400 180,110 240,870 681,380 Collection from Accounts Receivables Accounts Receivable - Mar 31, 2017 483,600 483,600 April Sales 483,600 483,600 May Sales 334,490 334,490 June Sales - - Total cash Collections 744,000 663,710 575,360 1,983,070 Merchandise Production Budget April May June Total Sales In units 24,000 16,600 22,200 62,800 Add: Closing Inventory in units 11,620 15,540 16,800 16,800 Total Needs 35,620 32,140 39,000 79,600 Less: Beginning Inventory in uints (16,800) (11,620) (15,540) (16,800) Required Units Produced 18,820 20,520 23,460 62,800 Direct Material Budget April May June Total Required Units Produced 18,820 20,520 23,460 62,800 Raw Material required per Unit 0.50 0.50 0.50 0.50 Total Raw Material Required 9,410 10,260 11,730 31,400 Add: Ending Inventory 5,130 5,865 5,100 5,100 Total Needs 14,540 16,125 16,830 36,500 Less: Beginning Inventory (4,705) (5,130) (5,865) (4,705) Total Raw Material Purchased 9,835 10,995 10,965 31,795 Cost per Unit - Raw Material 20 20 20 20 Cost of Raw Material Purchased 196,700 219,900 219,300 635,900 Schedule of Cash payments to Suppliers April May June Total Cash Payment Accounts Payable - March 31, 2017 211,400 211,400 April Purchases 196,700 196,700 May Purchases 219,900 219,900 Total Cash Payment to Suppliers 211,400 196,700 219,900 628,000 Direct Labor Budget April May June Total Required Units Produced 18,820 20,520 23,460 62,800 Direct Labor Hour per Unit 0.50 0.50 0.50 0.50 Total Direct Labor Hours Required 9,410 10,260 11,730 31,400 Cost per Direct Labor Hour 26 26 26 26 Direct Labor Cost 244,660 266,760 304,980 816,400 Manufacturing Overhead Budget April May June Total Variable Overhead - $3.80 per DLH 35,758 38,988 44,574 119,320 Fixed Overhead - Depreciation 31,400 31,400 31,400 94,200 Budgeted Total Overhead 67,158 70,388 75,974 213,520 Selling Expenses Budget April May June Total Sales Comm. - 5% 37,200 25,730 34,410 97,340 Sales Manager Salary 4,100 4,100 4,100 12,300 Total 41,300 29,830 38,510 109,640 General & Administrative Expenses Budget April May June Total Administrative Salaries 25,000 25,000 25,000 75,000 Interest on Long Term Notes Payable 4,120 4,120 4,120 12,360 Total 29,120 29,120 29,120 87,360 Cash budget April May June Total Opening cash Balance 51,000 209,532 290,844 51,000 Add: receipts Collection from Customers 744,000 663,710 575,360 1,983,070 Total Cash available 795,000 873,242 866,204 2,034,070 Less: Disbursements Cash Disbursement - Accounts Payable 211,400 196,700 219,900 628,000 Payment of Direct Labor 244,660 266,760 304,980 816,400 Payment of Variable Overhead 35,758 38,988 44,574 119,320 Selling Expenses 41,300 29,830 38,510 109,640 General & Admn. Expense 29,120 29,120 29,120 87,360 Purchase of Equipment - - 141,000 141,000 Dividend Paid - 21,000 - 21,000 Interest on Short Term Note Payable 230 - 110 340 Total Disbursement 562,468 582,398 778,194 1,923,060 Preliminary Cash Balance 232,532 290,844 88,010 111,010 Add: Finance from Bank - - 11,000 11,000 Less: Payment to Bank (23,000) - - (23,000) Net Cash Balance Closing 209,532 290,844 99,010 99,010 Answer 9. ZIGBY MANUFACTURING Budgeted Income Statement For Three Months Ended June 30, 2017 Sales 1,946,800 Cost of Goods Sold - 62,800 Units X $26.40 1,657,920 Gross Margin 288,880 Operating Expenses Sales Comm. - 5% 97,340 Sales Manager Salary 12,300 Administrative Salaries 75,000 Bank Interest Loan 12,360 Total Operating Expenses 197,000 Net Operating Income 91,880 Interest on Short Term Note Payable 340 Net Income before Tax 91,540 Income Tax - 40% 36,616 Net Income 54,924 Answer 10. ZIGBY MANUFACTURING Budgeted Balance Sheet June 30, 2017 Assets Current Assets Cash 99,010 Accounts Receivable 447,330 Raw Material Inventory - 5,100 Units X $20 102,000 Finished Goods Inventory - 16,800 Units X $26.40 443,520 Total Current Assets 1,091,860 Property, Plant & Equipment Equipment 763,000 Accumulated Dep. (255,200) 507,800 Total Assets 1,599,660 Liabilities & Stockholders' Equity Liabilities Current Liabilities Accounts Payable 219,300 Income Tax Payable 36,616 Short Term Notes Payable 11,000 266,916 Long Term Liabilities Long Term Notes Payable 515,000 Total Liabilities 781,916 Stockholders' Equity Common Stock 346,000 Retained Earnings 471,744 Total Stockholders' Equity 817,744 Total Liabilities & Stockholders' Equity 1,599,660 - - - Retained Earnings Statement June 30, 2017 Beginning Balance 437,820 Add: Net Income 54,924 Sub-total 492,744 Less: Dividend Paid 21,000 Ending Balance 471,744
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