Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1. 1. Prepare Gilder's operating budget and cash budget for 2025 by quarter. Required schedules and budgets include: sales budget, production budget, direct materials budget,

1.

1. Prepare Gilder's operating budget and cash budget for 2025 by quarter. Required schedules and budgets include: sales budget, production budget, direct materials budget, direct labor budget, manufacturing overhead budget, cost of goods sold budget, selling and administrative expense budget, schedule of cash receipts, schedule of cash payments, and cash budget. Manufacturing overhead costs are allocated based on direct labor hours. Round all calculations to the nearest dollar.

2.

2. Prepare Gilder's annual financial budget for 2025, including budgeted income statement and budgeted balance sheet.

More info:

a. Budgeted sales are 1,200 tires for the first quarter and expected to increase by 150 tires per quarter. Cash sales are expected to be 40% of total sales, with the remaining 60% of sales on account.

b.Finished Goods Inventory on December 31, 2024 consists of 400 tires at $29 each.

c.Desired ending Finished Goods Inventory is 40% of the next quarter's sales; first quarter sales for 2026 are expected be 1,800 tires. FIFO inventory costing method is used.

d.Raw Materials Inventory on December 31, 2024, consists of 800 pounds of rubber compound used to manufacture the tires.

e.Direct materials requirements are two pounds of a rubber compound per tire. The cost of the compound is $4.00 per pound.

f.Desired ending Raw Materials Inventory is 40% of the next quarter's direct materials needed for production; desired ending inventory for December 31, 2025 is 800 pounds; indirect materials are insignificant and not considered for budgeting purposes.

g.Each tire requires 0.30 hours of direct labor; direct labor costs average $14 per hour.

h.Variable manufacturing overhead is $2 per tire.

i.Fixed manufacturing overhead includes $2,500 per quarter in depreciation and $8,035 per quarter for other costs, such as utilities, insurance, and property taxes.

j.Fixed selling and administrative expenses include $13,000 per quarter for salaries; $5,400 per quarter for rent; $600 per quarter for insurance; and $500 per quarter for depreciation.

k.Variable selling and administrative expenses include supplies at 3% of sales.

l.Capital expenditures include $50,000 for new manufacturing equipment, to be purchased and paid in the first quarter.

m.Cash receipts for sales on account are 60% in the quarter of the sale and 40% in the quarter following the sale; December 31, 2024, Accounts Receivable is received in the first quarter of 2025; uncollectible accounts are considered insignificant and not considered for budgeting purposes.

n.Direct materials purchases are paid 60% in the quarter purchased and 40% in the following quarter; December 31, 2024, Accounts Payable is paid in the first quarter of 2025.

o.Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred.

p.Income tax expense is projected at $2,500 per quarter and is paid in the quarter incurred.

q.Gilder desires to maintain a minimum cash balance of $50,000 and borrows from the local bank as needed in increments of $1,000 at the beginning of the quarter; principal repayments are made at the beginning of the quarter when excess funds are available and in increments of $1,000; interest is 10% per year and paid at the beginning of the quarter based on the amount outstanding from the previous quarter.

BALANCE SHEET:

Gilder Tire Company

Balance Sheet

December 31, 2024

Assets

Current Assets:

Cash $51,000

Accounts Receivable 35,000

Raw Materials Inventory 3,200

Finished Goods Inventory 11,600

Total Current Assets. $100,800

Property, Plant, and Equipment:

Equipment 168,000

Less: Accumulated Depreciation (83,000). 85,000

Total Assets $185,800

Liabilities

Current Liabilities:

Accounts Payable $10,000

Stockholders' Equity

Common Stock, no par $130,000

Retained Earnings. 45,800

Total Stockholders' Equity 175,800

Total Liabilities and Stockholders' Equity $185,800

PLEASE ANSWER ALL QUESTIONS AND SHOW WORK THANKS SO MUCH!!

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The ASQ Certified Quality Auditor Handbook

Authors: Lance B Coleman

5th Edition

1951058097, 978-1951058098

More Books

Students also viewed these Accounting questions

Question

Differentiate the function. r(z) = 2-8 - 21/2 r'(z) =

Answered: 1 week ago

Question

How does the EEOC interpret the national origin guidelines?

Answered: 1 week ago

Question

What is the purpose of the OFCCP?

Answered: 1 week ago