Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for 2019 and reports a balance sheet at December 31, 2018 as follows: Endless Mountain Company Balance Sheet December 31, 2018 Assets Current assets: Cash $ 46,200 Accounts receivable (net) 260,000 Raw materials inventory (4,500 yards) 11, 250 Finished goods inventory (1,500 units) 32,250 Total current assets $349,700 Plant and equipment: Buildings and equipment 900,000 Accumulated depreciation (292,000) Plant and equipment, net 608,000 Total assets $957,700 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 158,000 Stockholders' equity: Common stock $ 419,800 Retained earnings 379,900 Total stockholders' equity 799,700 Total liabilities and stockholders' equity $957,700 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 2019 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 2020 is 13,000 units. 2. 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 of the sale and 25% are collected in the subsequent quarter. 3. Each quarter's ending finished goods inventory should equal 15% of the next quarter's unit sales. 4. 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, 2019 is 5,000 yards. 5. 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. 6. 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. 7. The budgeted variable manufacturing overhead per direct labor-hour is $3.00. The quarterly fixed manufacturing overhead is $150,000 including $20,000 of depreciation on equipment. The number of direct labor-hours is used as the allocation base for the budgeted plantwide overhead rate. All overhead costs (excluding depreciation) are paid in the quarter incurred. 8. The budgeted variable selling and administrative expense is $1.25 per unit sold. The fixed selling and administrative expenses per quarter include advertising ($25,000), executive salaries ($64,000), insurance ($12,000), property tax ($8,000), and depreciation expense ($8,000). All selling and administrative expenses (excluding depreciation) are paid in the quarter incurred. 9. The company plans to maintain a minimum cash balance at the end of each quarter of $30,000. Assume that any borrowings take place on the first day of the quarter. To the extent possible, the company will repay principal and interest on any borrowings on the last day of the fourth quarter. The company's lender imposes a simple interest rate of 3% per quarter on any borrowings. 0. Dividends of $15,000 will be declared and paid in each quarter. 11. The company uses a last-in, first-out (LIFO) inventory flow assumption. This means that the most recently purchased raw materials are the "first-out" to production and the most recently completed finished goods are the "first-out" to customers. Required 1 Required 2 Required 3 Required 4 Required 5 Required 7 Required 8 Prepare the quarterly manufacturing overhead budget. (Round "Budgeted direct labor hours" answers to 1 decimal place.) Endless Mountain Company Manufacturing Overhead Budget For the Year Ended December 31, 2019 Quarter 1 2 3 4 Year 4,013.0 8,425.0 4,125.0 5,800.0 22,363.0 $ 3 $ 3 $ 3 $ 3 $ 3 $ $ $ 12,375 $ $ Budgeted direct labor hours Variable manufacturing overhead per direct labor- hour Variable manufacturing overhead Fixed manufacturing overhead Total manufacturing overhead Less depreciation Cash disbursements for manufacturing overhead 12,039 150,000 162,039 25,275 150,000 175,275 17,400 150,000 67,089 600,000 150,000 162,375 167,400 667,089 20,000 20,000 155,275 20,000 142,375 20,000 147,400 800,000 (132,911) 142,039 $ Total manufacturing overhead Budgeted direct labor hours 667,088 22,363.0 29.83 Predetermined overhead rate for the year $ Required 1 Required 2 Required 3 Required 4 Required 5 Required 7 Required 8 Prepare the quarterly selling and administrative expense budget. (Round the Variable cost per unit to 2 decimal places.) Endless Mountain Company Selling and Administrative Expense Budget For the Year Ended December 31, 2019 Quarter 1 2 3 4 Year 12,000 37,000 15,000 25,000 89,000 Budgeted unit sales Variable selling and administrative expense per unit Variable selling and administrative expense Fixed selling and administrative expenses: Advertising Executive salaries Insurance Property taxes Depreciation Total fixed selling and administrative expenses Total selling and administrative expenses Less depreciation Cash disbursements for selling and administrative expenses 0 0 0 0 0 0 0 0 0 0 $ 0 0 $ 0 0 $ 0 Required 1 Required 2 Required 3 Required 4 Required 5 Required 7 Required 8 Prepare the quarterly cash budget. (Round final answers to the nearest whole dollar value.) Endless Mountain Company Cash Budget For the Year Ended December 31, 2019 Quarter 1 2 3 4 Year Beginning cash balance Add cash receipts: Collection from customers 0 0 0 0 0 Total cash available Less cash disbursements: Direct materials 0 0 0 0 0 Direct labor Manufacturing overhead Selling and administrative Dividends Total cash disbursements Excess or (deficiency) of cash available over disbursements Financing: Borrowings (at the beginnings of quarters) Repayment (at end of the year) 0 0 0 0 0