a. Budgeted sales are 1,400 sets for the first quarter and expected to increase by 150 sets per quarter. Cash sales are expected to be 30% of total sales, with the remaining 70% of sales on account. Sets are budgeted to sell for $90 per set. b. Finished Goods Inventory on December 31, 2024, consists of 200 sets at $27 each. c. Desired ending Finished Goods Inventory is 40% of the next quarter's sales; first quarter sales for 2026 are expected to be 2,000 sets. FIFO inventory costing method is used. d. Raw Materials Inventory on December 31, 2024, consists of 600 pounds. Direct materials requirement is three pounds per set. The cost is $2 per pound. e. Desired ending Raw Materials Inventory is 10% of the next quarter's direct materials needed for production; desired ending inventory for December 31, 2025, is 600 pounds; indirect materials are insignificant and not considered for budgeting purposes. f. Each set requires 0.30 hours of direct labor; direct labor costs average 12 per hour. g. Variable manufacturing overhead is $3.60 per set. h. Fixed manufacturing overhead includes $7,000 per quarter in depreciation and $2,585 per quarter for other costs, such as utilities, insurance, and property taxes. i. Fixed selling and administrative expenses include $11,000 per quarter for salaries; $1,500 per quarter for rent; $1,350 per quarter for insurance; and $1,500 per quarter for depreciation. j. Variable selling and administrative expenses include supplies at 2% of sales. k. Capital expenditures include $45,000 for new manufacturing equipment, to be purchased and paid for in the first quarter. I. Cash receipts for sales on account are 40% in the quarter of the sale and 60% in the quarter following the sale; Accounts Receivable balance on December 31, 2024, is expected to be received in the first quarter of 2025; uncollectible accounts are considered insignificant and not considered for budgeting purposes. m. Direct materials purchases are paid 90% in the quarter purchased and 10% in the following quarter; Accounts Payable balance on December 31, 2024, is expected to be paid in the first quarter of 2025. n. Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred. o. Income tax expense is projected at $3,500 per quarter and is paid in the quarter incurred. p. Trolley desires to maintain a minimum cash balance of $55,000 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.