Other data for Gavin Tre Company Click the icon to view the other data) The Gavin Tire Company manufactures racing tires for bicycles. Gavin sells tires for 570 each. Gavin is planning for the next year by developing a master budget by quarters Gavin's balance sheet for December 31. 2018, follows: Click the loon to view the balance sheet.) manufacturing ovemena bunge, S OOS SI DUS song and some expense opet wlocated based on direct labor hours. Round all calculations to the nearest dollar Begin by preparing the sales budget Read the resurements or c oncern payments, and as a rungovamo Gavin Tre Company Sales Budget For the Year Ended December 31, 2019 First Second Second Third Quarter Quarter 1.200 1,400 Quarter Quarter 1500 Bugheres to be old $ 112.000 126.000 420.000 4000 8000 $ $ Prepare the production budget Beview the dont you r ed above m . Check Answer (Unless otherwise noted, assume all of the following events occurred during 2018 and that any balances given are stated as of December 31, 2018.) a. Budgeted sales are 1,200 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, 2018 consists of 400 tires at $25 each. c. Desired ending Finished Goods Inventory is 20% of the next quarter's sales, first quarter sales for 2020 are expected be 2,000 tires. FIFO inventory costing method is used d. Raw Materials Inventory on December 31, 2018, consists of 800 pounds of rubber compound used to manufacture the tires. e. Direct materials requirements are 2 pounds of a rubber compound per tire. The cost of the compound is $7.00 per pound. Desired ending Raw Materials Inventory is 40% of the next quarter's direct materials needed for production, desired ending inventory for December 31, 2019 is 800 pounds, indirect materials are insignificant and not considered for budgeting purposes. Each tire requires 0.60 hours of direct labor, direct labor costs average $16 per hour. h. Variable manufacturing overhead is $1 per tire. 1. Fixed manufacturing overhead includes $2,000 per quarter in depreciation and $14,500 per quarter for other costs, such as utilities, insurance, and property taxes, 1. Fixed selling and administrative expenses include $13,000 per quarter for salarios: $5,100 per quarter for above rent; $1,050 per quarter for insurance; and $1,500 per quarter for depreciation k. Variable selling and administrative expenses include supplies at 3% of sales. Gavin Tire Company Balance Sheet December 31, 2018 Assets muta ocate I, schedule egin b Current Assets: Cash Accounts Receivable 40,000 22,000 5,600 10,000 Raw Materials Inventory Budget $ 77,600 Sales Finished Goods Inventory Total Current Assets Property, Plant, and Equipment: Equipment Less: Accumulated Depreciation Total sa 168,000 (77,000) 8 SL81 Prepard 91,000 Total Assets $ Review 168,600 Liabilities (77,000) 91,000 Less: Accumulated Depreciation 168,600 Total Assets Liabilities Current Liabilities: Accounts Payable 17,000 Stockholders' Equity Common Stock, no par 130,000 21,600 Retained Earnings Total Stockholders' Equity 151,600 168,600 Total Liabilities and Stockholders' Equity prus, ana Requirements 1. Prepare Gavin's operating budget and cash budget for 2019 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 Gavin's annual financial budget for 2019, including budgeted income statement and budgeted balance sheet. ers' E
