a. Budgeted sales are 1,900 tires for the first quarter and expected to increase by 200 tires per quarter. Cash sales are expected to be 20% of total sales, with the remaining 80% of sales on account. b. Finished Goods Inventory on December 31, 2024 consists of 400 tires at $30 each. c. Desired ending Finished Goods Inventory is 20% of the next quarter's sales; first quarter sales for 2026 are expected be 2,700 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 $6.50 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 0.40 hours of direct labor; direct labor costs average $14 per hour. h. Variable manufacturing overhead is $2 per tire. i Fixed manufacturing overhead includes $3,000 per quarter in depreciation and $19,350 per quarter for other costs, such as utilities, insurance, and property taxes. i. Fixed selling and administrative expenses include $9,000 per quarter for salaries; $3,000 per quarter for rent; $900 per quarter for insurance; and $1,500 per quarter for depreciation. k. Variable selling and administrative expenses include supplies at 3% of sales. 1. Capital expenditures include $20,000 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. Grilton Tire Company Balance Sheet December 31, 2024 Assets Current Assets: Cash $ 40,000 Accounts Receivable 50,000 Raw Materials Inventory 5,200 Finished Goods Inventory 12,000 Total Current Assets $ 107,200 Property, Plant, and Equipment: Equipment 183,000 (39,000) Less: Accumulated Depreciation 144,000 $ 251,200 Total Assets Liabilities Current Liabilities: Accounts Payable $ 9,000 Stockholders' Equity