Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

* More Info (Unless otherwise noted, assume all of the following events occurred during 2024 and that any balances given are stated as of December

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
* More Info (Unless otherwise noted, assume all of the following events occurred during 2024 and that any balances given are stated as of December 31, 2024) a Budgeted sales are 2,000 tires for the first quarter and expected to increase by 200 tires per quarter Cash sales are expected to be 10% of total sales, with the remaining 90% of sales on account. b. Finished Goods Inventory on December 31, 2024 consists of 600 tires at $29 each c. Desired ending Finished Goods Inventory is 40% of the next quarter's sales, first quarter sales for 2026 are expected be 2,800 tires. FIFO inventory costing method is used d. Raw Materials Inventory on December 31, 2024, consists of 1,200 pounds of rubber compound used to manufacture the tires e. Direct materials requirements are two pounds of a rubber compound per tire. The cost of the compound is $8.00 per pound 1 Desired ending Raw Materials Inventory is 20% of the next quarter's direct materials needed for production, desired ending inventory for December 31, 2025 is 1,200 pounds, indirect materials are insignificant and not considered for budgeting purposes. 9. Each tire requires 0.80 hours of direct labor, direct labor costs average S20 per hour h. Variable manufacturing overhead is $1 per tire Fixed manufacturing overhead includes $2,000 per quarter in depreciation and $44.170 per quarter for other costs, such as utilities, insurance, and property taxes Fixed selling and administrative expenses include $11,000 per quarter for salaries: $1,800 per quarter for rent, $1,800 per quarter for insurance, and $1,500 per quarter for depreciation k Variable selling and administrative expenses include supplies at 2% of sales. L Capital expenditures include $40,000 for new manufacturing equipment to be purchased and paid in the first quarter m. Cash receipts for sales on account are 70% in the quarter of the sale and 30% in the quarter following the sale, December 31, 2024, Accounts Receivable is received in the first quarter of 2025, uncollectible accounts are considered insignificant and not considered for budgeting purposes. n. Direct materials purchases are paid 90% in the quarter purchased and 10% in the following quarter December 31, 2024, Accounts Payable is paid in the first quarter of 2025 0. Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred p. Income tax expense is projected at $3,500 per quarter and is paid in the quarter incurred. 9. Gessing 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 4% per year and paid at the beginning of the quarter based on the amount outstanding from the previous quarter The Gessing Tire Company manufactures racing tires for bicycles Gessing sells Other data for Gossing Tire Company tires for $75 each. Gessing is planning for the next year by developing a master Click the icon to view the other data) budget by quarters. Gessing's balance sheet for December 31, 2024 follows (Click the icon to view the balance sheet) Read the requirements Requirement 1. Prepare Gessing's operating budget and cash budget for 2025 by quarter Required schedules and budgets include sales budget, production budget direct materials budget direct labor budget, manufacturing overhead budget cost of goods sold budget, selling and administrative expense budget schedule of cash receipts, schedule of cash payments, and cash budget Manufacturing overhead costs are allocated based on direct labor hours. Round all calculations to the nearest dollar Begin by propaning the sales budget Gossing Tire Company Sales Budget For the Year Ended December 31, 2026 First Second Third Fourth Quarter Quarter Quarter Quarter Total Budgeted tires to be sold 2,000 2,200 2.400 2,600 9,200 s Sales price per unit 75s 75 5 75$ 75s 75 $ Total sales 150 000S 165,000 $ 180,000 $ 195 000 $ 690,000 Prepare the production budget Review the sales budget you prepared above. Choose from any list or enter any number in the input fields and then click Check Answer Prepare the production budget Review the sales budget you. Rrepared above. Fourth Quarter Total Gessing Tire Company Production Budget For the Year Ended December 31, 2025 First Second Third Quarter Quarter Quarter Budgeted tires to be sold 2,000 2,200 2.400 Plus Desired tires in ending inventory 880 960 1,040 Total tires needed 2,880 3,160 3.440 Tires in beginning inventory 600 Less 880 960 2,280 2.280 2,480 Budgeted tires to be produced Prepare the direct materials budget. Review the production budget you prepared above. 9,200 1,120 2,600 1,120 3,720 1,040 2,680 10,320 600 9.720 Choose from any list or enter any number in the input fields and then click Check Answer. 15 parts remaining Clear All Gessing Tire Company Direct Materials Budget For the Year Ended December 31, 2025 First Second Third Fourth Quarter Quarter Quarter Quarter Total Budgeted tires to be produced 9,720 2,280 2 2.280 2 2,480 2 2.680 2 4,560 912 4,560 992 4,960 1,072 5,360 1,200 19,440 1,200 5,472 20.640 Direct materials per tire Direct materials needed for production Plus Desired direct materials in ending inventory Total direct materials needed Less Direct materials in beginning inventory Budgeted purchases of direct materials Direct materials cost per pound Budgeted cost of direct materials 5,552 912 6,032 992 6,560 1,072 1 200 1 200 4,272 4,640 5.488 19,440 5,040 8.00 $ $ 8.00 $ 8.00 $ 8.00 $ 8.00 34,176 $ 37120 $ 40,320 s 43,904 $ 155,520 Gessing Tire Company Direct Labor Budget For the Year Ended December 31, 2025 First Second Third Fourth Quarter Quarter Quarter Quarter Total Direct labor hours needed for production Budgeted direct labor cost Choose from any list or enter any number in the input fields and then click Check Answer. 15 parts remaining Clear All i Data Table Gessing Tire Company Balance Sheet December 31, 2024 Assets Current Assets Cash 67,000 Accounts Receivable Raw Materials Inventory 35,000 9,600 17,400 Finished Goods Inventory Total Current Assets 129,000 Property, Plant, and Equipment: Equipment 168,000 (68,000) 100,000 Less: Accumulated Depreciation 229,000 Total Assets Liabilities Current Liabilities: Current Liabilities: Accounts Payable $ 11,000 Stockholders' Equity Common Stock, no par $ 160,000 58,000 Retained Earnings Total Stockholders' Equity 218,000 $ 229,000 Total Liabilities and Stockholders' Equity

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

ISO 27001 Controls A Guide To Implementing And Auditing

Authors: IT Governance

1st Edition

1787781445, 978-1787781443

More Books

Students also viewed these Accounting questions