ACCT 2302 FALL 2015: ACCT 2302 FALL 2015 HYBRID CRN 7025
ACCT 2302 FALL 2015: ACCT 2302 FALL 2015 HYBRID CRN 7025
| Extra Credit Assignment | instructions | help |
Problem 7-4A Manufacturing: Preparation of a complete master budget LO P1, P2, P3
[The following information applies to the questions displayed below.]
The management of Zigby Manufacturing prepared the following estimated balance sheet for March, 2015: |
| ZIGBY MANUFACTURING Estimated Balance Sheet March 31, 2015 | ||
| Assets | ||
| Cash | $ | 30,000 |
| Accounts receivable | 464,100 | |
| Raw materials inventory | 98,505 | |
| Finished goods inventory | 450,840 | |
| Total current assets | 1,043,445 | |
| Equipment, gross | 620,000 | |
| Accumulated depreciation | (160,000) | |
| Equipment, net | 460,000 | |
| Total assets | $ | 1,503,445 |
| Liabilities and Equity | ||
| Accounts payable | 206,405 | |
| Short-term notes payable | 22,000 | |
| Total current liabilities | $ | 228,405 |
| Long-term note payable | 510,000 | |
| Total liabilities | 738,405 | |
| Common stock | 345,000 | |
| Retained earnings | 420,040 | |
| Total stockholders’ equity | 765,040 | |
| Total liabilities and equity | $ | 1,503,445 |
To prepare a master budget for April, May, and June of 2015, management gathers the following information. |
| a. | Sales for March total 22,100 units. Forecasted sales in units are as follows: April, 22,100; May, 19,100; June, 19,500; July, 22,100. Sales of 250,000 units are forecasted for the entire year. The product’s selling price is $30.00 per unit and its total product cost is $25.50 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 materials inventory is 4,925 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. |
| c. | 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 17,680 units, which complies with the policy. |
| d. | Each finished unit requires 0.50 hours of direct labor at a rate of $25 per hour. |
| e. | Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $3.50 per direct labor hour. Depreciation of $25,290 per month is treated as fixed factory overhead. |
| f. | Sales representatives’ commissions are 6% of sales and are paid in the month of the sales. The sales manager’s monthly salary is $4,000. |
| g. | Monthly general and administrative expenses include $22,000 administrative salaries and 0.9% monthly interest on the long-term note payable. |
| h. | 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 $70,000. 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. |
| K. | Dividends of $20,000 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 40% in the quarter and paid in the third calendar quarter. |
| m. | Equipment purchases of $140,000 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: |
10.00 points Required information
Problem 7-4A Part 1
| 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
| 2. | Production budget. |
3. value:
10.00 points Required information
Problem 7-4A Part 3
| 3. | Raw materials budget. |
References eBook & Resources eBook: Prepare a cash budget.eBook: Prepare budgeted financial statements.eBook: Prepare the operating budget components of a master budgetfor a manufacturing company.Ask your instructor a questionCheck my work
4. value:
10.00 points Required information
Problem 7-4A Part 4
| 4. | Direct labor budget. |
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
| 5. | Factory overhead budget. |
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
| 6. | Selling expense budget. |
7. value:
10.00 points Required information
Problem 7-4A Part 7
| 7. | General and administrative expense budget. |
8. value:
10.00 points Required information
Problem 7-4A Part 8
| 8. | Cash budget. (Negative balance and Loan repayment amount should be indicated with minus sign. Round your answers to 2 decimal places.) |
9. value:
10.00 points Required information
Problem 7-4A Part 9
| 9. | Budgeted income statement for the entire first quarter (not for each month separately). |
10. value:
10.00 points Required information
Problem 7-4A Part 10
| 10. | Budgeted balance sheet. |
References eBook & Resources Expanded tableDifficulty: 2 MediumLearning Objective: 07-P2 Prepare a cash budget. Problem 7-4A Part 10Learning 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
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Solution: ACCT 2302 FALL 2015: ACCT 2302 FALL 2015 HYBRID CRN 7025