The management of Zigby Manufacturing prepared the following estimated balance s
ID: 2421620 • Letter: T
Question
The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2015:
Zigby Manufacturing
estimated balance sheet
March 31,2015
Assets Liabilitites and Equity
Cash $40000 Accounts payable $200,500
Accounts receivable $342,248 Short-term notes payable $12,000
Raw Materials inventory $98500 Total current liabilities 212,000
Finished goods inventory 325,540 Long-term note payable 500,000
Total Current assets 806,288 Total liabilities 712,500
Equipment, gross 600,000 Common Stock 335,000
Accumulated depreciation (150,000) Retained earnings 208,788
Equipment, net 450,000 Total stockholder's equity 543,788
Total assets $1,256,288 Total liabilities and equity 1,256,288
To prepare a master budget for April, May and June of 2015, management gathers the following information:
a. Sales for March total 20,500 units. Forcatsted 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 product's selling price is $23.85 per unit and its total product cost is $19.85 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 maerials inventory is 4,925 units, which complies with the policy. The expected June 30 ending raw materials inventory is 4,000 units. Raw materials cost $20 per unit. Each finished unit requires .50 units of raw materials.
c. Company policy calls for a given month's ending finished goods inventroy to equal 80% of the next month's expected unit sales. the March 31 finished goods inventory is 16,400 units, which complies with the policy.
d Each finished unit requires .50 hours 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 representatives' commissions are 8% of sales and are paid in the month of sales. The sales manager's monthly salary is $3,000.
g. Monthly gerenal and administrative expenses include $12,000 administrative salaries and .9% montly interest on the long-term note payable.
g. 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 is 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 $40,000. If necessary, te compalny 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). Of the ending cash balance exceeds the minimum, the excess will be applied to repaying the short-term notes payable balance.
k. Dividends of $10,000 are to be declared and paid in May
l. No cash payments for income taxes are to be made during the second calendar quarter. Income tax will be assessed at 35% int he quarter and paid in the third calendar quarter.
m. Equipment purchases of $130,000 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 quartr (not for each month separately) 10. Budgeted balance sheet as of the end of hte second calendar quarter
Explanation / Answer
Answer:
Sales budget for the second Quarter Particulars April May June Units Sold 20500 19500 20000 Price per unit 23.85 23.85 23.85 Total Sales Amount 488925 465075 477000 Production budget for second quarter Particulars April May June Forcasted units of sale 20500 19500 20000 Add: Closing finished goods 15600 16000 16400 Less: Opening finished goods 16400 15600 16000 Production required 19700 19900 20400 Multiply : Cost per unit 19.85 19.85 19.85 Production cost budget amount 391045 395015 404940 Raw material budget for second quarter Particulars April May June Current Month Requirement 9850 9950 10200 Add: Closing balance 4975 5100 4000 Less: Opening balance 4925 4975 5100 Raw material budget required 9900 10075 9100 Multiply : Cost per unit 20 20 20 Raw material budget amount 198000 201500 182000 Labour cost Budget Amount Particulars April May June Production units 19700 19900 20400 Multiply : labour hours required per unit 0.5 0.5 0.5 No of units of labour hours required 9850 9950 10200 Multiply: Cost per labour hour 15 15 15 Total cost of Labour hours 147750 149250 153000Related Questions
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