Company Overview Apex Tire Manufacturing Co. stands at the forefront of the tire industry, embodying a legacy of innovation, quality, and customer satisfaction. Established with a vision to redefine the standards of tire manufacturing, Apex Tire has evolved into a nationwide presence with its headquarters situated in the industrious state of Michigan. The company's commitment to excellence is evident through its network of cutting-edge production facilities strategically positioned across the country, including states such as Ohio, Texas, and California. Product Focus: UrbanFlex City Tire The UrbanFlex City Tire, a flagship product of Apex Tire Manufacturing Co., is engineered to deliver unparalleled performance tailored for urban driving conditions. Characterized by its advanced technology and superior design, this tire offers exceptional traction, durability, and a smooth driving experience. The UrbanFlex City Tire is manufactured in Apex Tire's state-of-the-art production facilities located in Michigan, the home of the company's headquarters. These facilities are equipped with cutting-edge technology and adhere to the highest industry standards, ensuring the tire meets the rigorous quality and performance criteria set by Apex Tire. PART I: BUDGETING A- Materials: CityGrip Rubber and UrbanSteel Belts 1- CityGrip Rubber Description: The CityGrip Rubber, fundamental to the UrbanFlex City Tire's performance, is meticulously formulated from a blend of high-quality natural rubber and specialized synthetic rubber compounds. Natural rubber provides essential elasticity and grip, while synthetic compounds enhance specific performance characteristics. This combination ensures superior traction on urban roads, balancing durability and responsiveness in various driving conditions. Quantity per Unit: 4 kilograms Cost per Unit: $5.00 2- UrbanSteel Belts Description: The UrbanFlex City Tire's strength and durability are attributed to UrbanSteel Belts, consisting of a high-tensile steel alloy suitable for tire reinforcement. This specialized steel alloy enhances the tire's structural integrity, ensuring stability and control during urban driving challenges. Quantity per Unit: 2 meters of high-tensile steel alloy Cost per Unit: $6.50 B- Direct Labor Cost Description: Direct labor involves the cost of the workers directly involved in the manufacturing process of the UrbanFlex City Tire. This includes machine operators, technicians, and other personnel contributing directly to the production. Direct Labor Hours per Unit: 0.5 hours Hourly Wage Rate: $20.00 per hour C- Manufacturing Overhead Cost Description: Manufacturing overhead (MO) involves indirect costs essential for production, including machinery depreciation, utilities, maintenance, supervision salaries, indirect labor wages, and factory insurance. These costs, related to machinery and facilities, collectively contribute to the overall manufacturing overhead, supporting efficient production processes. A variable overhead rate is estimated per machine hour. Machine Hours per Unit: 0.2 hours Variable MO Costs per Machine Hour: $10.00 Fixed MO Cost per Quarter: $25,000 D- Selling and admirative costs Marketing and administrative costs are divided into variable and fixed elements. Variable marketing costs, tied to advertising and promotions, shift with sales and campaigns, while fixed marketing costs, covering salaries and contracts, remain constant. On the administrative side, variable costs, linked to business activities like office supplies, fluctuate, while fixed costs, including staff salaries and office rent, stay stable. Variable cost: 5% of sales Fixed costs: $12,000 per quarter E- Inventory Beginning Inventory UrbanFlex City Tire 2,400 units CityGrip Rubber UrbanSteel Belts 6,960 kg 3,480 meters F- Sales Ending inventory 20% of the budgeted unit sales for the next quarter 15% of the following quarter's production needs 15% of the following quarter's production needs UrbanFlex City Tire sells for $62.00 per unit. Budgeted unit sales for the next six quarters are as follows: Year Quarter 2024 2025 1 2 3 Budgeted unit sales 12,000 10,000 8,000 4 11,000 1 2 12,800 10,600 REQUIRED: Prepare all necessary budgets to determine the budgeted operating income. Present your answer using Excel.