1. Prepare Trolley'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. Prepare Trolley's annual financial budget for 2025, including budgeted income statement and budgeted balance sheet. 3. Trolley sold 7,000 sets in 2025, and its actual operating income was as follows: Trolley Toy Company Income Statement For the Year Ended December 31, 2025 Net Sales Revenue $ 630,000 Cost of Goods Sold: Variable 94,890 Fixed 36,540 131,430 Gross Profit 498,570 Selling and Administrative Expenses: Variable 12,600 Fixed 61,400 74,000 Operating Income 424,570 Other Income and (Expenses): Interest Expense (425) Income Before Income Taxes 424,145 Income Tax Expense 22,000 Net Income $ 402,145 CA Prepare a flexible budget performance report through operating income for 2025. Show product costs separately from selling and administrative costs. To simplify the calculations due to sets in beginning inventory having a different cost than those produced and sold in 2025, assume the following product costs: Variable Fixed Total Static budget $ 84,240 $ 38,340 $ 122,580 Flexible budget 93,940 38,340 132,280 4. What was the effect on Trolley's operating income of selling 500 sets more than the static budget level of sales? 5. What is Trolley's static budget variance for operating income? 6. Explain why the flexible budget performance report provides more useful information to Trolley's managers than the static budget performance report. What insights can Trolley's managers draw from this performance report? 7. During 2025, Trolley recorded the following cost data below. Compute the cost and efficiency variances for direct materials and direct labor. Standard Cost Information Quantity Cost Direct materials 3 pounds per set $2 per pound Direct labor 0.30 hours per set $12 per hour Variable manufacturing overhead 0.30 hours per set $12 per hour Fixed manufacturing overhead Static 0.30 hours per set $21.00 per hour budget amount: $38,340 Actual Cost Information Direct materials (20,700 pounds @ $2.50 per pound) $ 51,750 Direct labor (2,060 hours @ $12.40 per hour) 25,544 Variable manufacturing overhead (2,060 hours @ $11.60 per hour) 23,896 Fixed manufacturing overhead 36,540 8. For manufacturing overhead, compute the variable overhead cost and efficiency variances and the fixed overhead cost and volume variances. 9. Prepare the standard cost income statement for 2025. 10. Calculate Trolley's ROI for 2025. To calculate average total assets, use the December 31, 2024, balance sheet for the beginning balance and the budgeted balance sheet for December 31, 2025, for the ending balance. Round all of your answers to four decimal places. 11. Calculate Trolley's profit margin ratio for 2025. Interpret your results. 12. Calculate Trolley's asset turnover ratio for 2025. Interpret your results. 13. Use the expanded ROI formula to confirm your results from Requirement 10. Interpret your results. 14. Trolley's management has specified a 30% target rate of return. Calculate Trolley's RI for 2025. Interpret your results 86,600 Trolley Toy Company Balance Sheet December 31, 2024 Assets Current Assets Cash $ 58,000 Accounts Receivable 22,000 Raw Materials Inventory 1,200 Finished Goods Inventory 5,400 Total Current Assets Property, Plant, and Equipment: Equipment 142,000 Less: Accumulated Depreciation (47,000) Total Assets $ Liabilities Current Liabilities: Accounts Payable Stockholders' Equity Common Stock, no par $ 120,000 Retained Earnings 53,600 Total Stockholders' Equity Total Liabilities and Stockholders' Equity $ 95,000 181,600 EA 8.000 173,600 181,600 $ Begin by preparing the sales budget. Trolley Toy Company Sales Budget For the Year Ended December 31, 2025 First Second Third Fourth Quarter Quarter Quarter Quarter Total Budgeted sets to be sold 1,400 1,550 1,700 1,850 6,500 90 $ Sales price per unit 90 $ 90 $ 90 $ 90 Total sales $ 126,000 $ 139,500 $ 153,000 $ 166,500 $ 585,000 Prepare the production budget. Review the sales budget you prepared above. Trolley Toy Company Production Budget For the Year Ended December 31, 2025 First Second Third Quarter Quarter Quarter Budgeted sets to be sold 1,400 1,550 1,700 620 Plus: Desired sets in ending inventory 680 740 Total sets needed 2,020 2.230 2,440 Less: Sets in beginning inventory 200 620 680 1,820 1,610 1,760 Budgeted sets to be produced Fourth Quarter 1,850 800 Total 6,500 800 2,650 740 7,300 200 1,910 7,100 Fourth Quarter 1,910 Total 7,100 3 3 Review the production budget you prepared above. Trolley Toy Company Direct Materials Budget For the Year Ended December 31, 2025 First Second Third Quarter Quarter Quarter Budgeted sets to be produced 1,820 1,610 1,760 Direct materials per set (pounds) 3 3 3 Direct materials needed for production 5,460 4,830 5,280 Plus: Desired direct materials in ending inventory 483 528 573 Total direct materials needed 5,943 5,358 5,853 Less: Direct materials in beginning inventory 600 483 528 Budgeted purchases of direct materials 5,343 4,875 5,325 x Direct materials cost per pound 2 $ 2||$ 2 $ Budgeted cost of direct materials purchases $ 10,686 $ 9,750 $ 10,650 $ 5,730 600 21,300 600 6,330 573 21,900 600 5,757 2$ 21,300 2 11,514 $ 42,600 Review the production budget you prepared above. Trolley Toy Company Direct Labor Budget For the Year Ended December 31, 2025 First Second Third Quarter Quarter Quarter Budgeted sets to be produced 1,820 1,610 1,760 Direct labor hours per unit 0.30 0.30 0.30 Direct labor hours needed for production 546 483 528 Direct labor cost per hour $ 12 $ 12 $ 12 $ 6,552 $ 5,796 $ 6,336 Budgeted direct labor cost Fourth Quarter Total 1,910 7,100 0.30 0.30 573 2,130 12 12 $ EA $ 6,876 | $ 25,560 Total 7,100 3.60 Trolley Toy Company Manufacturing Overhead Budget For the Year Ended December 31, 2025 First Second Third Fourth Quarter Quarter Quarter Quarter Budgeted sets to be produced 1,820 1,610 1,760 1,910 VOH cost per set $ 3.60 $ 3.60 $ 3.60 $ 3.60 $ Budgeted VOH $ 6,552 | $ 5,796 | $ 6,336 | $ 6,876 | $ Budgeted FOH Depreciation 7,000 7,000 7,000 7,000 Utilities, insurance, property taxes 2,585 2,585 2,585 2,585 Total budgeted FOH 9,585 9,585 9,585 9,585 16,137 | $ 15,381 $ 15,921 $ 16,461 | $ Budgeted manufacturing overhead costs CA 25,560 28,000 10,340 38,340 63,900 Direct labor hours 546 483 528 573 2,130 Budgeted manufacturing overhead costs 63,900 30 Predetermined overhead allocation rate Before preparing the cost of goods sold budget, calculate the projected manufacturing cost per set for 2025. (Round all amoun Direct materials cost per set 6.00 Direct labor cost per set 3.60 Manufacturing overhead cost per set 9.00 18.60 Total projected manufacturing cost per set for 2025 $ Review the sales budget you prepared above. Fourth Quarter Total Trolley Toy Company Selling and Administrative Expense Budget For the Year Ended December 31, 2025 First Second Third Quarter Quarter Quarter $ 11,000 $ 11,000 $ 11,000 $ 1,500 1,500 1,500 1,350 1,350 1,350 1,500 1,500 1,500 2,520 2,790 3,060 Salaries Expense Rent Expense Insurance Expense Depreciation Expense Supplies Expense 11,000 $ 1,500 1,350 1,500 3,330 44,000 6,000 5,400 6,000 11,700 17,870 $ 18,140 $ 18,410 || $ 18,680 || $ Total budgeted selling and administrative expense 73,100 Cash Receipts from Customers Total sales First Second Third Fourth Quarter Quarter Quarter Quarter Total $ 126,000 $ 139,500 $ 153,000 $ 166,500 $ 585,000 First Second Third Fourth Quarter Quarter Quarter Quarter Total $ 22,000 37,800 35,280 $ 52,920 41,850 39,060 Cash Receipts from Customers: Accounts Receivable balance, December 31, 2024 1st Qtr.Cash sales 1st Qtr. Credit sales, collection of Qtr. 1 sales in Qtr. 1 1st Qtr.Credit sales, collection of Qtr. 1 sales in Qtr. 2 2nd Qtr.Cash sales 2nd Qtr.Credit sales, collection of Qtr. 2 sales in Qtr. 2 2nd Qtr.Credit sales, collection of Qtr. 2 sales in Qtr. 3 3rd Qtr.-Cash sales 3rd Qtr. Credit sales, collection of Qtr. 3 sales in Qtr. 3 3rd Qtr.Credit sales, collection of Qtr. 3 sales in Qtr. 4 4th Qtr.Cash sales 4th Qtr.Credit sales, collection of Qtr. 4 sales in Qtr. 4 Total cash receipts from customers $ 58,590 45,900 42,840 $ 64,260 49,950 46,620 95,080 $ 133,830 $ 147,330 $ 160,830 $ 537,070 $ Accounts Receivable balance, December 31, 2025: 4th Qtr.Credit sales, collection of Qtr. 4 sales in Qtr. 1 of 2026 HA 69,930 Cash Payments First Quarter Second Quarter Third Quarter Fourth Quarter Total Total direct materials purchases First Quarter Second Quarter Third Quarter Fourth Quarter Total Cash Payments Direct Materials: Accounts Payable balance, December 31, 2024 1st Qtr.Qtr. 1 direct material purchases paid in Qtr. 1 1st Qtr.Qtr. 1 direct material purchases paid in Qtr. 2 2nd Qtr. Qtr. 2 direct material purchases paid in Qtr. 2 2nd Qtr.-Qtr. 2 direct material purchases paid in Qtr. 3 3rd Qtr. Qtr. 3 direct material purchases paid in Qtr. 3 3rd Qtr. Qtr. 3 direct material purchases paid in Qtr. 4 4th Qtr.Qtr. 4 direct material purchases paid in Qtr. 4 Total payments for direct materials Direct Labor: Total payments for direct labor