The management of Zigby Manufacturing prepared the following estimated balance s
ID: 2466517 • Letter: T
Question
The management of Zigby Manufacturing prepared the following estimated balance sheet for March, 2015:
To prepare a master budget for April, May, and June of 2015, management gathers the following information.
Sales for March total 20,000 units. Forecasted sales in units are as follows: April, 20,000; May, 19,000; June, 19,500; July, 20,000. Sales of 245,000 units are forecasted for the entire year. The product’s selling price is $26.00 per unit and its total product cost is $22.80 per unit.
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 4,800 units, which complies with the policy. The expected June 30 ending raw materials inventory is 4,500 units. Raw materials cost $20 per unit. Each finished unit requires 0.50 units of raw materials.
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 16,000 units, which complies with the policy.
Each finished unit requires 0.50 hours of direct labor at a rate of $20 per hour.
Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $3.20 per direct labor hour. Depreciation of $23,400 per month is treated as fixed factory overhead.
Sales representatives’ commissions are 6% of sales and are paid in the month of the sales. The sales manager’s monthly salary is $3,500.
Monthly general and administrative expenses include $17,000 administrative salaries and 0.9% monthly interest on the long-term note payable.
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).
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.
The minimum ending cash balance for all months is $45,000. 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.
No cash payments for income taxes are to be made during the second calendar quarter. Income tax will be assessed at 35% in the quarter and paid in the third calendar quarter.
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:
References
Section BreakProblem 7-4A Manufacturing: Preparation of a complete master budget LO P1, P2, P3
1.
value:
10.00 points
Required information
Problem 7-4A Part 1
Sales budget.
References
eBook & Resources
Expanded tableDifficulty: 2 MediumLearning Objective: 07-P2 Prepare a cash budget.
Problem 7-4A Part 1Learning Objective: 07-P1 Prepare the operating budget components of a master budget-for a manufacturing company.Learning Objective: 07-P3 Prepare budgeted financial statements.
Ask your instructor a questionCheck my work
2.
value:
10.00 points
Required information
Problem 7-4A Part 2
References
eBook & Resources
Expanded tableDifficulty: 2 MediumLearning Objective: 07-P2 Prepare a cash budget.
Problem 7-4A Part 2Learning Objective: 07-P1 Prepare the operating budget components of a master budget-for a manufacturing company.Learning Objective: 07-P3 Prepare budgeted financial statements.
Ask your instructor a questionCheck my work
3.
value:
10.00 points
Required information
Problem 7-4A Part 3
References
eBook & Resources
Expanded tableDifficulty: 2 MediumLearning Objective: 07-P2 Prepare a cash budget.
Problem 7-4A Part 3Learning Objective: 07-P1 Prepare the operating budget components of a master budget-for a manufacturing company.Learning Objective: 07-P3 Prepare budgeted financial statements.
Ask your instructor a questionCheck my work
4.
value:
10.00 points
Required information
Problem 7-4A Part 4
References
eBook & Resources
Expanded tableDifficulty: 2 MediumLearning Objective: 07-P2 Prepare a cash budget.
Problem 7-4A Part 4Learning Objective: 07-P1 Prepare the operating budget components of a master budget-for a manufacturing company.Learning Objective: 07-P3 Prepare budgeted financial statements.
Ask your instructor a questionCheck my work
5.
value:
10.00 points
Required information
Problem 7-4A Part 5
References
eBook & Resources
Expanded tableDifficulty: 2 MediumLearning Objective: 07-P2 Prepare a cash budget.
Problem 7-4A Part 5Learning Objective: 07-P1 Prepare the operating budget components of a master budget-for a manufacturing company.Learning Objective: 07-P3 Prepare budgeted financial statements.
Ask your instructor a questionCheck my work
6.
value:
10.00 points
Required information
Problem 7-4A Part 6
References
eBook & Resources
Expanded tableDifficulty: 2 MediumLearning Objective: 07-P2 Prepare a cash budget.
Problem 7-4A Part 6Learning Objective: 07-P1 Prepare the operating budget components of a master budget-for a manufacturing company.Learning Objective: 07-P3 Prepare budgeted financial statements.
Ask your instructor a questionCheck my work
7.
value:
10.00 points
Required information
Problem 7-4A Part 7
References
eBook & Resources
Expanded tableDifficulty: 2 MediumLearning Objective: 07-P2 Prepare a cash budget.
Problem 7-4A Part 7Learning Objective: 07-P1 Prepare the operating budget components of a master budget-for a manufacturing company.Learning Objective: 07-P3 Prepare budgeted financial statements.
Ask your instructor a questionCheck my work
8.
value:
10.00 points
Required information
Problem 7-4A Part 8
Cash budget. (Negative balance and Loan repayment amount should be indicated with minus sign. Round your answers to 2 decimal places.)
Problem 7-4A Part 9
The management of Zigby Manufacturing prepared the following estimated balance sheet for March, 2015:
Explanation / Answer
Ans-
Zigby Manufacturing Sales Budget Month Detail April May June Sales Units 20,000 19,000 19,500 × Price per Unit 26.00 26.00 26.00 Total Sales 520,000.00 494,000.00 507,000.00 Production Budget Month Detail April May June Sale Units 20,000 19,000 19,500 Planned ending units (19000*0.8),(19500*0.8),(20000*0.8) 15,200 15,600 16,000 Beginning units (20000*0.8),(19000*0.8),(19500*0.8) 16,000 15,200 15,600 Planned production units (Sales units+Planned endingunits -Beginning units) 19,200 19,400 19,900 Direct Material Purchases Budget Month April May June Planned Production Units 9,600 9,700 9,950 Ending Direct Material (9700*0.5),(9950*0.5),(4000*0.5)(0*0.5) 4,850 4,975 4,500 Raw materials required = (Planned Production Units+Ending direct material) 14,450 14,675 14,450 Beginning Direct Material (9600*0.5),(9700*0.5),(9950*0.5)(4000*0.5) 4,800 4,850 4,975 Direct Material to Purchases =(Raw materials required-Beginning Material) 9,650 9,825 9,475 × Direct Material per Unit 0.50 0.50 0.50 Budgeted Direct Material 4,825 4,913 4,738 × Cost per Direct Material unit 20.00 20.00 20.00 Budgeted Direct Material Cost 96,500.00 98,250.00 94,750.00 Direct Labor Cost Budget Month Detail April May June Finished Goods 19,200 19,400 19,900 Direct labour hour required per unit 0.50 0.50 0.50 Total direct labor hours (Finished Goods*Direct labour hour required per unit) 9,600.00 9,700.00 9,950.00 Direct labor rate 20.00 20.00 20.00 Total direct labor cost(Total direct labor hours*Direct labor rate) 192,000.00 194,000.00 199,000.00Related Questions
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