BA 213 Managerial Accounting ProjectWinter 2018 The Petty Toy Company manufactures toy building block sets for human beings aged 4 to 11. Petty is planning for 2019 by developing a master budget by quarters. Petty's balance sheet for December 31, 2018, is on last page of hand-out. Other budget data for Petty Toy Company: 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 $9o per set. b. Finished Goods Inventory on December 31, 2018, 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 2020 are expected to be 2,000 sets. FIFO inventory costing method is used. d. Raw Materials Inventory on December 31, 2018, consists of 600 pounds. Direct materials requirement is 3 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, 2019, is 600 pounds; indirect materials are insignificant and not considered for budgeting purposes. f. Each set requires o.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 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. L 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, 2018, is expected to be received in the first quarter of 2019; uncollectible accounts are considered insignificant and not considered for budgeting purposes