978-0078025587 Chapter 22 Solution Manual Part 5

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