i More Info (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 1,700 tires for the first quarter and expected to increase by 250 tire Cash sales are expected to be 30% of total sales, with the remaining 70% of sales on account. b. Finished Goods Inventory on December 31, 2018 consists of 200 tires at $32 each. c. Desired ending Finished Goods Inventory is 20% 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 400 pounds of rubber compound used to manufacture the tires. e. Direct materials requirements are 2 pounds of a rubber compound per tire. The cost of the compound is $5.00 per pound. f. Desired ending Raw Materials Inventory is 40% of the next quarter's direct materials needed for production, desired ending inventory for December 31, 2019 is 400 pounds; indirect materials are insignificant and not considered for budgeting purposes. g. Each tire requires 0.80 hours of direct labor, direct labor costs average $20 per hour. h. Variable manufacturing overhead is $5 per tire. i. Fixed manufacturing overhead includes $4,000 per quarter in depreciation and $50,864 per quarter for other costs, such as utilities, insurance, and property taxes. i. Fixed selling and administrative expenses include $10.000 per quarter for salaries: $4.200 per quarter for rent: $1,800 per quarter for insurance, and $2,000 per quarter for depreciation. k. Variable selling and administrative expenses include supplies at 3% of sales. I. Capital expenditures include $25,000 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 80% in the quarter purchased and 20% in the following quarter, December 31, 2018, Accounts Payable is paid in the first quarter of 2019. 0. 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. Grilton desires to maintain a minimum cash balance of $65,000 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 12% per year and paid at the beginning of the quarter based on the amount outstanding from the previous quarter. Print Done Data Table Grilton Tire Company Balance Sheet December 31, 2018 Assets Current Assets Cash $ 69,000 45,000 2,000 6,400 Accounts Receivable Raw Materials Inventory Finished Goods Inventory Total Current Assets Property, Plant, and Equipment: Equipment Less: Accumulated Depreciation $ 122,400 155,000 (68,000) 87,000 209,400 Total Assets $ Liabilities $ 15,000 Current Liabilities: Accounts Payable Stockholders' Equity Common Stock, no par $ Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity 130,000 64,400 194,400 $ 209,400 Print Done Requirement 1. Prepare Grilton's operating budget and cash budget for 2019 by quarter. Required schedules and budgets includ schedule of cash payments, and cash budget. Manufacturing overhead costs are allocated based on direct labor hours. Round al Begin by preparing the sales budget. Grilton Tire Company Sales Budget For the Year Ended December 31, 2019 First | Second Third Quarter Quarter Quarter 1,700 1,950 2,200 $ 80 $ 80 136,000 S 156,000 $ 176,000 Fourth Quarter 2,450 $ 80 $ 196,000 Total 8,300 Budgeted tires to be sold Sales price per unit S $ 664,000 Total sales Prepare the production budget. Review the sales budget you prepared above. Grilton Tire Company Production Budget For the Year Ended December 31, 2019 First Second Third Quarter Quarter Quarter Budgeted tires to be sold 1,700 1,950 2,200 Plus: Desired tires in ending inventory 390 440 490 Total tires needed 2.090 2.390 2,690 Less: Tires in beginning inventory 440 890 2.000 2.250 Budgeted tires to be produced Fourth Quarter 2.450 540 2,990 490 2,500 Total 8,300 540 8,840 200 390 8,640 Grilton Tire Company Cost of Goods Sold Budget For the Year Ended December 31, 2019 First Second Third Quarter Quarter Quarter Fourth Quarter Total Tires produced and sold in 2019 Total budgeted cost of goods sold