The management of Zigby Manufacturing prepared the following estimated balance s
ID: 2533895 • Letter: T
Question
The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017:
To prepare a master budget for April, May, and June of 2017, management gathers the following information:
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.
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.
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.
Each finished unit requires 0.50 hours of direct labor at a rate of $15 per hour.
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.
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.
Monthly general and administrative expenses include $34,000 administrative salaries and 0.8% monthly interest on the long-term note payable.
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).
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 $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.
Dividends of $29,000 are to be declared and paid in May.
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.
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.
Estimated Balance Sheet
March 31, 2017 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, gross 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
Explanation / Answer
As per Chegg Policy, allowed to do only first four parts of sub parts. repost belance parts to get answer please
1. Sales Budget April May Jun Total Jul Sales (units) 25000 17000 22400 64400 25000 Selling Price 26 26 26 26 26 Sales (dollars) 650000 442000 582400 1674400 650000 2. Production Budget April May Jun Total Jul Estimate Sale Units 25000 17000 22400 64400 25000 Desired Ending Inventory 80% of next month 13600 17920 20000 20000 0 Total Units Needed 38600 34920 42400 84400 25000 Less: Beginning Inventory 20000 13600 17920 20000 20000 Production Needed 18600 21320 24480 64400 5000 3. Raw Material Purchase Budget April May Jun Total Production Needs (0.5*Production) 9300 10660 12240 32200 Desired Ending Inventory (50% of next month) 5330 6120 5900 5900 Subtotal 14630 16780 18140 38100 Less: Beginning Inventory 4650 5330 6120 4650 Purchases Required 9980 11450 12020 33450 Purchase Cost: April May Jun Total 20 Per unit 199600 229000 240400 669000 Purchases Required 199600 229000 240400 669000Related Questions
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