Balance Sheet December 31, 2016 Assets 6 Current assets 7 Cash 8 Accounts receivable 9 Raw materials inventory (4,500 yards) 10 Finished goods inventory (1,500 units) 11 Total current assets 12 Plant and equipment 13 Buildings and equipment 14 Accumulated depreciation 15 Plant and equipment, net 16 Total assets 17 18 9 Current liabilities: 20 Accounts payable 21 Stockholders' equity: 22 Common stock 46,200 260,000 11,250 32250 $349,700 900,000 608,000 957.700 Liabilities and Stockholders' Equity $158,000 S 419,800 379,900 23 Retained earnings 24 Total stockholders' equity 25 Total liabilities and stockholders' equity 799,700 The company's chief financial officer (CFO), in consultation with various managers across the organization has developed the following set of assumptions to help create the 2017 budget: 1. The budgeted unit sales are 12,000 units, 37,000 units, 15,000 units, and 25,000 units for quarters 1-4, respectively. Notice that the company experiences peak sales in the second and fourth quarters. The budgeted selling price for the year is $32 per unit. The budgeted unit sales for the first quarter of 2018 is 13,000 units All sales are on credit. Uncollectible accounts are negligible and can be ignored. Seventy-five percent of all credit sales are collected in the quarter ofthe sale and 25% are collected in the subsequent quarter. Each quarter's ending finished goods inventory should equal 15% of the next quarter's unit sales. Each unit of finished goods requires 3.5 yards of raw material that costs $3.00 per yard. Each quarter's ending raw materials inventory should equal 10% of the next quarter's production needs. The estimated ending raw materials inventory on December 31, 2017, is 5,000 yards. Seventy percent of each quarter's purchases are paid for in the quarter of purchase. The remaining 30% of each quarter's purchases are paid in the following quarter. Direct laborers are paid $18 an hour and each unit of finished goods requires 0.25 direct labor- hours to complete. All direct labor costs are paid in the quarter incurred The budgeted variable manufacturing overhead per direct labor-hour is $3.00. The quar- terly fixed manufacturing overhead is $150,000 including $20,000 of depreciation orn equipment. The number of direct labor-hours is used as the allocation base for the bud- 2. 3. 4. 5. 6. 7. geted plantwide overhead rate. All overhead costs (excluding depreciation) are paid in the quarter incurred