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Title: Problem 22-7A
QA_Ori:
Part 1
ZIGBY MANUFACTURING
Sales Budgets
April, May, and June 2013
Budgeted
Units
Budgeted
Unit Price
Budgeted
Total Dollars
April 2013 20,500 $23.85 $ 488,925
Part 2
ZIGBY MANUFACTURING
Production Budget
April, May, and June 2013
April May June Total
Next month’s budgeted sales 19,500 20,000 20,500
Ratio of inventory to future sales x 80% x 80% x 80%
Part 3
ZIGBY MANUFACTURING
Raw Materials Budget
April, May, and June 2013
April May June Total
Production budget (units) 19,700 19,900 20,400
Materials requirement per unit x 0.50 x 0.50 x 0.50
20
0
Part 4
ZIGBY MANUFACTURING
Direct Labor Budget
April, May, and June 2013
April May June Total
Budgeted production (units) 19,700 19,900 20,400
Part 5
ZIGBY MANUFACTURING
Factory Overhead Budget
April, May, and June 2013
April May June Total
Labor hours needed 9,850 9,950 10,200
Part 6
ZIGBY MANUFACTURING
Selling Expense Budgets
April, May, and June 2013
April May June Total
Budgeted sales $488,925 $465,075 $477,000
Part 7
ZIGBY MANUFACTURING
General and Administrative Expense Budgets
April, May, and June 2013
April May June Total
Salaries $12,000 $12,000 $12,000 $36,000
Part 8
ZIGBY MANUFACTURING
Cash Budgets
April, May, and June 2013
April May June
Beginning cash balance $
40,000
$ 83,346 $124,295
Cash receipts from customers (note A) 488,925 481,770 468,653
Total cash available 528,925 565,116 592,948
Cash disbursements
Payments for raw materials (note B) 200,500 198,000 201,500
Supporting calculations April May June Total
Note A: Cash receipts from customers
Total sales $488,92
5
$465,07
5
$477,00
0
$1,431,0
00
Cash sales (30%)
146,677
139,522
143,100
429,299
NOTE: Cash sales are rounded down to the nearest whole dollar. All other amounts are
rounded up to the nearest whole dollar. Student answers will vary slightly if they round
differently.
Part 9
ZIGBY MANUFACTURING
Budgeted Income Statement
For Three Months Ended June 30, 2013
Sales $1,431,000
Cost of goods sold (60,000 units @ $19.85) 1,191,000
Gross profit 240,000
Operating expenses
Part - Budgeted Retained Earnings & Budgeted Balance Sheet
ZIGBY MANUFACTURING
Budgeted Balance Sheet
June 30, 2013
ASSETS
Cash $ 40,000 Cash budget
Accounts receivable 333,900 Note C
Raw materials inventory
Finished goods inventory
80,000
325,540
Note D
Note E
Supporting Footnotes
Note C
Beginning receivables $ 342,248
Note D
Beginning raw materials inventory $ 98,500
Note E
Beginning finished goods inventory $ 325,540
Note F
Note G
Note H
Beginning accounts payable $ 200,500
Note I
ZIGBY MANUFACTURING
Budgeted Statement of Retained Earnings
For Three Months Ended June 30, 2013
Retained earnings, Beginning $208,788
Add: Net income 43,485
252,273
Title: Problem 22-1B
QA_Ori:
Part 1
H2O SPORTS CORPORATION
Merchandise Purchases Budgets
For April, May, and June
April May June
WATER SKIS
Budgeted sales for next month 90,000 130,000 100,000
TOW ROPES
Budgeted sales for next month 90,000 110,000 100,000
Ratio of ending inventory to future sales 10% 10% 10%
LIFE JACKETS
Budgeted sales for next month 190,000 200,000 120,000
Part 2. Analysis Component
The factor that causes the first month’s purchases to be so much smaller is the excess
This overstocking factor could exist for a number of reasons, including:
- Management may have simply lost sight of inventory levels, thereby allowing them to
reach inappropriately high levels.
- There may have been some potentially disruptive factor (such as a strike, bad weather,
- A supplier may have recently located a new distribution facility nearby, with the result
This means H2O Sports can now get by with a much smaller safety stock.
Title: Problem 22-2B
QA_Ori:
SONY STEREO
Cash Budgets
For April, May, and June
April May June
Beginning balance $ 3,000 $ 53,000 $ 44,000
Cash receipts
Collection on accounts receivable* 136,000 210,000 290,200
Receipts from bank loan 80,000 _______ _______
* Interest at 12% on $80,000 for 90 days is $2,400.
Supporting calculations
Collections of credit sales* March April May June
March sales ($180,000)—[25%: 45%: 20%: 9%]..................$ 45,000 $ 81,000 $ 36,000 $ 16,200
Payments on credit purchases** March April May June
March purchases ($100,000)—(0%: 80%: 20%)..........................................$0 $ 80,000 $ 20,000 $ -
Title: Problem 22-3B
QA_Ori:
Part 1
Cash collections of credit sales (accounts receivable)
From sales in Total % Collected March April
January $396,000 23% $ 91,080
February 495,000 35 173,250
23 $113,850
Part 2
Budgeted ending inventories (in units)
January February March April
Next month’s budgeted sales 22,500 19,000 18,750 21,000
Part 3
CONNICK COMPANY
Merchandise Purchases Budgets
For February, March, and April
February March April
Budgeted ending inventory (from part 2) 3,900 3,850 4,300
(3,850)
Part 4
Cash payments on product purchases (for March and April)
From purchases in Total % Paid March April
February $261,600 70% $183,120
Part 5
CONNICK COMPANY
Cash Budget
March and April
March April
Beginning cash balance $ 50,000 $ 58,070
Cash receipts from customers 431,530 425,150
Total available cash 481,530 483,220
Part 6
Analysis Component: Information about the supply of cash in the near future would be
helpful to the management of Connick Company. A good cash budget would be likely
