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 2017 and reports a balance sheet at December 31, 2016, as follows: Endless Mountain Company Balance Sheet December 31, 2016 Assets Current assets: Cash $ 46,200 Accounts receivable 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 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. 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, 2017, 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. 10. 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: The company's CFO has asked you to prepare the 2017 master budget. To fulfill this request, prepare the following budget schedules and financial statements. 1. Quarterly sales budget including a schedule of expected cash collections. 2. Quarterly production budget. 3. Quarterly direct materials budget including a schedule of expected cash disbursements for purchases of materials. 4. Quarterly direct labor budget. 5. Quarterly manufacturing overhead budget. 6. Ending finished goods inventory budget at December 31, 2017. 7. Quarterly selling and administrative expense budget. 8. Quarterly cash budget. 9. Income statement for the year ended December 31, 2017. 10. Balance sheet at December 31, 2017. Prepare the quarterly manufacturing overhead budget. (Round "Budgeted direct labor hours" answers to 1 decimal place.) 1 3 Year Endless Mountain Company Manufacturing Overhead Budget For the Year Ended December 31, 2017 Quarter 2 Budgeted direct labor hours Variable manufacturing overhead per direct labor-hour Variable manufacturing overhead Fixed manufacturing overhead Total manufacturing overhead 0 0 Less depreciation Cash disbursements for manufacturing overhead 0 0 0 0 0 0 0 0 Total manufacturing overhead Budgeted direct labor hours Predetermined overhead rate for the year 0 Prepare the ending finished goods inventory budget at December 31, 2017. (Round your answers to 2 decimal places.) Endless Mountain Company Ending Finished Goods Inventory Budget (absorption costing basis) For the Year Ended December 31, 2017 Quantity Cost Total Item Production cost per unit: Direct materials Direct labor Manufacturing overhead Unit product cost yards hours per yard per hour per hour hours $ 0.00 Budgeted finished goods inventory: Units from prior year's production Unit product cost Cost from prior year's production Units from current year's production Unit product cost Cost from current year's production Cost of ending finished goods inventory $ 0 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, 2017 Quarter 1 2 3 4 Year 0 0 0 0 0 Beginning cash balance Add cash receipts: Collection from customers Total cash available Less cash disbursements: Direct materials 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) Interest (at 3% per quarter) Total financing Ending cash balance 0 0 0 0 0 0 0 0 0 0 0 0 0 0 $ 0$ 0 $ 0 $ $ 0 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, 2017 Quarter 1 2 3 4 Year 0 0 0 0 0 Beginning cash balance Add cash receipts: Collection from customers Total cash available Less cash disbursements: Direct materials 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) Interest (at 3% per quarter) Total financing Ending cash balance 0 0 0 0 0 0 0 0 0 0 0 0 0 0 $ 0$ 0 $ 0 $ $ 0 Prepare the income statement for the year ended December 31, 2017. (Round final answers to the nearest whole dollar value.) Endless Mountain Company Budgeted Income Statement For the Year Ended December 31, 2017 (Absorption costing basis) 0 0 $ 0 Endless Mountain Company Budgeted Balance Sheet December 31, 2017 Assets Current assets: 0 Total current assets Plant and equipment: 0 Plant and equipment, net Total assets $ 0 Liabilities and Stockholders' Equity Current liabilities: Stockholders' equity: 0 Total stockholders' equity Total liabilities and stockholders' equity $ 0