Gavin Tire Company Balance Sheet December 31, 2018 Assets Current Assets: Cash 46,000 Accounts Receivable 22,000 Raw Materials Inventory 9,800 24,500 Finished Goods Inventory Total Current Assets $ 102,300 Property, Plant, and Equipment: Equipment 177,000 (83,000) Less: Accumulated Depreciation 94,000 $ 196,300 Total Assets Liabilities Current Liabilities: Tuvumivu YUNI Raw Materials Inventory 9,800 24,500 Finished Goods Inventory Total Current Assets $ 102,300 Property, Plant, and Equipment: Equipment 177,000 (83,000) Less: Accumulated Depreciation 94,000 $ 196,300 Total Assets Liabilities Current Liabilities: Accounts Payable $ 14,000 Stockholders' Equity Common Stock, no par $ 150,000 32,300 Retained Earnings Total Stockholders' Equity 182,300 $ 196,300 Total Liabilities and Stockholders' Equity e. (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 1,900 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 700 tires at $35 each. c. Desired ending Finished Goods Inventory is 40% of the next quarter's sales; first quarter sales for 2020 are expected be 2,700 tires. FIFO inventory costing method is used. d. Raw Materials Inventory on December 31, 2018, consists of 1,400 pounds of rubber compound used to manufacture the tires. Direct materials requirements are 2 pounds of a rubber compound per tire. The cost of the compound is $7.00 per pound. f. Desired ending Raw Materials Inventory is 10% of the next quarter's direct materials needed for production; desired ending inventory for December 31, 2019 is 1,400 pounds; indirect materials are insignificant and not considered for budgeting purposes. g. Each tire requires 0.20 hours of direct labor; direct labor costs average $16 per hour. h. Variable manufacturing overhead is $3 per tire. i. Fixed manufacturing overhead includes $3,000 per quarter in depreciation and $6,180 per quarter for other costs, such as utilities, insurance, and property taxes. j. Fixed selling and administrative expenses include $10,000 per quarter for salaries; $4,800 per quarter for rent; $600 per quarter for insurance; and $1,500 per quarter for depreciation. k. Variable selling and administrative expenses include supplies at 3% of sales. n..!! !.. ...da on nnn f.. g. Each tre requires 0.20 nours of direct lapor, direct labor costs average 10 per nour. h. Variable manufacturing overhead is $3 per tire. i. Fixed manufacturing overhead includes $3,000 per quarter in depreciation and $6,180 per quarter for other costs, such as utilities, insurance, and property taxes. j. Fixed selling and administrative expenses include $10,000 per quarter for salaries; $4,800 per quarter for rent; $600 per quarter for insurance; and $1,500 per quarter for depreciation. k. Variable selling and administrative expenses include supplies at 3% of sales. I. Capital expenditures include $20,000 for new manufacturing equipment, to be purchased and paid in the first quarter. m. Cash receipts for sales on account are 75% in the quarter of the sale and 25% in the quarter following the sale; December 31, 2018, Accounts Receivable is received in the first quarter of 2019; uncollectible accounts are considered insignificant and not considered for budgeting purposes. n. Direct materials purchases are paid 50% in the quarter purchased and 50% in the following quarter; December 31, 2018, Accounts Payable is paid in the first quarter of 2019. o. Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred. p. Income tax expense is projected at $4,500 per quarter and is paid in the quarter incurred. q. Gavin desires to maintain a minimum cash balance of $45,000 and borrows from the local bank as needed in increments of $1,000 at the beginning of the quarter; principal repayments are made at the beginning of the quarter when excess funds are available and in increments of $1,000; interest is 4% per year and paid at the beginning of the quarter based on the amount outstanding from the previous quarter. Score: 25.06 of 100 pts 1 of 1 (1 complete) HW Score: 25.06%, 25.06 of 1 x P22-41A (similar to) Question Help Other data for Gavin Tire Company: (Click the icon to view the other data.) The Gavin Tire Company manufactures racing tires for bicycles. Gavin sells tires for $65 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 icon to view the balance sheet.) Read the requirements. Gavin Tire Company Manufacturing Overhead Budget For the Year Ended December 31, 2019 First Second Third Fourth Quarter Quarter Quarter Quarter Total Budgeted tires to be produced 2,040 2,180 2,380 2,580 9,180 VOH cost per tire Budgeted VOH Budgeted FOH Depreciation 3,000 6,180 3,000 6,180 3,000 6,180 3,000 6,180 12,000 24,720 Utilities, insurance, property taxes 9,180 9,180 9,180 9,180 36,720 Total budgeted FOH Budgeted manufacturing overhead costs |(Click the icon to view the balance sheet.) Quarter Quarter Quarter Quarter Total Budgeted tires to be produced 2,040 2,180 2,380 2,580 9,180 VOH cost per tire Budgeted VOH Budgeted FOH Depreciation 3,000 6,180 3,000 6,180 3,000 6,180 3,000 6,180 12,000 24,720 Utilities, insurance, property taxes Total budgeted FOH 9,180 9,180 9,180 9,180 36,720 Budgeted manufacturing overhead costs Direct labor hours 408 436 476 516 1,836 Budgeted manufacturing overhead costs Predetermined overhead allocation rate Choose from any liat or enter any number in the innut fields and then clickCheck