Equipment 8: Furniture Monthly Rent Life Press that applies ink $250 $12,000 5 years Light-exposure table (dries the ink) 20 2,000 10 years Display furniture for retail area 40 4,000 10 years Computer hardware 8: software for shirt desi and nroduction 150 5'200 4 years Dryer conveyer belt 3,520 10 years Computer hardware 8:. software for Blank Tshirts is the only direct material used in the production process. The cost per shirt was $8 in 2016 but will jump to $9.00 in 2017. Credit terms will carry over from 2016; 40% due in the quarter of purchase with the remaining 60% to be paid in the following quarter. Sydney will maintain an ending inventory of blank shirts equal to 20% of the next quarter's sales volume. Shirts to be silk-screened are considered direct materials inventory. Sydney uses FIFO to account for the direct materials inventory and will carry no beginning or ending inventory for the finished products. Sydney estimates the number of shirts to be sold in the next five quarters, beginning January 2017, to be: Fourth Quaiter, year 2017 First Quarter, year 2018 The selling price of each shirt will be $15. 10 percent of sales are projected to be cash sales with the remaining sales on account. Some accounts had to be written off last year, so one percent of credit sales are going to be budgeted as bad debt in each quarter of 2017. Assume no write-offs will occur until 2018. Of the collectible credit sales, Sydney expects 65% in the quarter of the sale and the remaining collectible balance to be received in the following quarter. The estimated cost of ink used in the silk-screen process will be $37,500 in 2017 and will be applied quarterly based on the number of shirts produced. This cost is treated as an indirect material cost. Knowing that the silk-screen process is labor intensive, Sydney plans to hire six students to help with the process. Based on Sydney's sales projections, 5,500 hours of labor will be incurred during 2017 at an hourly rate of $12. Sydney expects that 92% of each quarter's labor cost will be paid in the quarter incurred. The remaining cost will be paid in the following quarter