Assets Cash Accounts receivable $ 144,000 Liabilities 1,239,840 354,600 1,171,944 1,620,000 Total assets $4,530,384 Total liabilities and equity To prepare a master budget for April, May, and June, management gathers the following information. a. Sales for March total 73,800 units. Budgeted sales in units follow: April, 73,800; May, 70,200; June, 72,000; and July, 73,800. The product's selling price is $24.00 per unit and its total product cost is $19.85 per unit. b. Raw materials inventory consists solely of direct materials that cost $20 per pound. Company policy calls for a given month's ending materials inventory to equal 50% of the next month's direct materials requirements. The March 31 raw materials inventory is 17,730 pounds. The budgeted June 30 ending raw materials inventory is 14,400 pounds. Each finished unit requires 0.50 pound of direct materials. Raw materials inventory Finished goods inventory Equipment Less: Accumulated depreciation March 31 $ 2,160,000 540,000 Liabilities and Equity Accounts payable Loan payable Long-term note payable Equity Common stock Retained earnings $ 723,600 12,000 1,800,000 1,206,000 788,784 $ 2,535,600 1,994,784 $ 4,530,384 c. Company policy calls for a given month's ending finished goods inventory to equal 80% of the next month's budgeted unit sales. The March 31 finished goods inventory is 59,040 units. d. Each finished unit requires 0.50 hour of direct labor at a rate of $15 per hour. e. The predetermined variable overhead rate is $2.70 per direct labor hour. Depreciation of $72,000 per month is the only fixed factory overhead item. f. Sales commissions of 8% of sales are paid in the month of the sales. The sales manager's monthly salary is $10,800. g. Monthly general and administrative expenses include $43,200 for administrative salaries and 0.9% monthly interest on the long- Pr
Assets Cash Accounts receivable $ 144,000 Liabilities 1,239,840 354,600 1,171,944 1,620,000 Total assets $4,530,384 Total liabilities and equity To prepare a master budget for April, May, and June, management gathers the following information. a. Sales for March total 73,800 units. Budgeted sales in units follow: April, 73,800; May, 70,200; June, 72,000; and July, 73,800. The product's selling price is $24.00 per unit and its total product cost is $19.85 per unit. b. Raw materials inventory consists solely of direct materials that cost $20 per pound. Company policy calls for a given month's ending materials inventory to equal 50% of the next month's direct materials requirements. The March 31 raw materials inventory is 17,730 pounds. The budgeted June 30 ending raw materials inventory is 14,400 pounds. Each finished unit requires 0.50 pound of direct materials. Raw materials inventory Finished goods inventory Equipment Less: Accumulated depreciation March 31 $ 2,160,000 540,000 Liabilities and Equity Accounts payable Loan payable Long-term note payable Equity Common stock Retained earnings $ 723,600 12,000 1,800,000 1,206,000 788,784 $ 2,535,600 1,994,784 $ 4,530,384 c. Company policy calls for a given month's ending finished goods inventory to equal 80% of the next month's budgeted unit sales. The March 31 finished goods inventory is 59,040 units. d. Each finished unit requires 0.50 hour of direct labor at a rate of $15 per hour. e. The predetermined variable overhead rate is $2.70 per direct labor hour. Depreciation of $72,000 per month is the only fixed factory overhead item. f. Sales commissions of 8% of sales are paid in the month of the sales. The sales manager's monthly salary is $10,800. g. Monthly general and administrative expenses include $43,200 for administrative salaries and 0.9% monthly interest on the long- Pr
College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
22nd Edition
ISBN:9781305666160
Author:James A. Heintz, Robert W. Parry
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Chapter24: Analysis Of Financial Statements
Section: Chapter Questions
Problem 2SEB: ANALYSIS OF ACTIVITY MEASURES Based on the financial statement data in Exercise 24-1B, compute the...
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Transcribed Image Text:The management of Zigby Manufacturing prepared the following balance sheet for March 31.
ZIGBY MANUFACTURING
Balance Sheet
March 31
Assets
Cash
Accounts receivable
Raw materials inventory
Finished goods inventory
Equipment
Less: Accumulated depreciation
$ 2,160,000
540,000
$ 144,000
1,239, 840
354,600
1,171,944
1,620,000
Liabilities
Liabilities and Equity
Accounts payable
Loan payable
Long-term note payable
Equity
Common stock
Retained earnings
$ 723,600
12,000
1,800,000
1,206,000
788,784
$ 2,535,600
1,994,784
$4,530,384
Total assets
$4,530,384 Total liabilities and equity
To prepare a master budget April, May, and June, management gathers the following information.
a. Sales for March total 73,800 units. Budgeted sales in units follow: April, 73,800; May, 70,200; June, 72,000; and July, 73,800. The
product's selling price is $24.00 per unit and its total product cost is $19.85 per unit.
b. Raw materials inventory consists solely of direct materials that cost $20 per pound. Company policy calls for a given month's
ending materials inventory to equal 50% of the next month's direct materials requirements. The March 31 raw materials inventory
is 17,730 pounds. The budgeted June 30 ending raw materials inventory is 14,400 pounds. Each finished unit requires 0.50
pound of direct materials.
c. Company policy calls for a given month's ending finished goods inventory to equal 80% of the next month's budgeted unit sales.
The March 31 finished goods inventory is 59,040 units.
d. Each finished unit requires 0.50 hour of direct labor at a rate of $15 per hour.
e. The predetermined variable overhead rate is $2.70 per direct labor hour. Depreciation of $72,000 per month is the only fixed
factory overhead item.
f. Sales commissions of 8% of sales are paid in the month of the sales. The sales manager's monthly salary is $10,800.
g. Monthly general and administrative expenses include $43,200 for administrative salaries and 0.9% monthly interest on the long- Prepare a direct labor budget
term note payable.
h. The company budgets 30% of sales to be for cash and the remaining 70% on credit. Credit sales are collected in full in the month
following the sale (no credit sales are collected in the month of sale).
i. All raw materials purchases are on credit, and accounts payable are solely tied to raw materials purchases. Raw materials
purchases are fully paid in the next month (none are paid in the month of purchase).
j. The minimum ending cash balance for all months is $144,000. If necessary, the company borrows enough cash using a loan to
reach the minimum. Loans require an interest payment of 1% at each month-end (before any repayment). If the month-end
preliminary cash balance exceeds the minimum, the excess will be used to repay any loans.
k. Dividends of $36,000 are budgeted to be declared and paid in May.
I. No cash payments for income taxes are budgeted in the second calendar quarter. Income tax will be assessed at 35% in the
quarter and budgeted to be paid in the third calendar quarter.
m. Equipment purchases of $360,000 are budgeted for the last day of June.
Units to produce
Direct labor hours needed
Cost of direct labor
ZIGBY MANUFACTURING
Direct Labor Budget
April
May
June
Total
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