(Solved): Problem 20-4A (Algo) Manufacturing: Preparation of a complete master budget LO P1, P2, P3 The manag ...

Problem 20-4A (Algo) Manufacturing: Preparation of a complete master budget LO P1, P2, P3 The management of Zigby Manufacturing prepared the following balance sheet for March \( 31 . \) To prepare a master budget for April, May, and June, management gathers the following information. a. Sales for March total 22,500 units. Budgeted sales in units follow: April, 22,500; May, 19,500; June, 21,700; and July, 22,500, The product's selling price is \( \$ 23.00 \) per unit and its total product cost is \( \$ 18.50 \) 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 \( 5.025 \) pounds. The budgeted June 30 ending raw materials inventory is \( 5.400 \) 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 18,000 units. d. Each finished unit requires \( 0.50 \) hour of direct labor at a rate of \( \$ 10 \) per hour. e. The predetermined variable overthead rate is \( \$ 4.10 \) per direct labor hour. Depreciation of \( \$ 30,788 \) per month is the only fixed factory overhead item. f. Sales commissions of \( 6 \% \) of sales are paid in the month of the sales. The sales manager's monthly salary is \( \$ 4,400 \). 9. Monthly general and administrative expenses include \( \$ 26,000 \) for administrative salaries and \( 0.5 \% \) monthly interest on the longterm note payable. 9. Monthly general and administrative expenses include \( \$ 26,000 \) for administrative salaries and \( 0.5 \% \) monthily interest on the longterm-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 \( \$ 54,000 \). 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 \( \$ 24,000 \) are budgeted to be declared and paid in May. 1. 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. \( \mathrm{m} \). Equipment purchases of \( \$ 100,000 \) are budgeted for the last day of June. Required: Prepare the following budgets for the months of April, May, and June: 1. Sales budget. 2. Production budget. 3. Direct materiais budget. 4. Direct labor budget. 5. Factory overhead budget. 6. Selling expense budget 7. General and administrative expense budget. 8. Schedule of cash receipts. 9. Schedule of cash payments for direct materials. 10. Casin budget. 11. Budgeted income statement for entire second quarter (not monthly). 12. Budgeted balance sheet at June 30 .