OPTIMA, INC.

General information: Selling price of bamboo rocking horses $33.50 Linear feet of bamboo required per rocking horse 3 Cost of bamboo per foot $2.00 Hours required to build 0.50 Average hourly direct labor rate $15.00 Additional information: Ending finished goods inventory (percentage of the next quarter's sales) 40% Ending raw materials inventory (percentage of the next quarter's production) 30% Quarters/Year Variable manufacturing overhead rate per direct labor hour $8.00 Estimated quarterly fixed manufacturing overhead $275,000.00 4 Estimated monthly selling and administrative expenses: Variable $6.00 Fixed $200,000.00 Expected number of frames sold in following quarters: 4th Quarter 2019 55,000 1st Quarter 2020 65,000 2nd Quarter 2020 70,000 3rd Quarter 2020 75,000 4th Quarter 2020 90,000 1st Quarter 2021 90,000 2nd Quarter 2021 75,000 Additional information: Cash on hand at April 1 $250,000 Percentage of sales in cash 80% Percentage of credit sales collected during quarter of sale 50% Percentage of credit sales collected in quarter following sale 50% Percentage of direct material purchases paid in quarter purchased 80% Percentage of direct material purchases paid in following quarter 20% Depreciation included in quarterly fixed manufacturing overhead $75,000 Depreciation included in quarterly fixed selling and administartive expenses $50,000 Amount expected to be paid for a piece of equipment (purchased in 4th Quarter) $750,000 Minimum cash balance required $40,000 Borrowing increments $1 Quarterly dividend payments $250,000 Regarding Inventory: Work-in-process has a zero beginning and ending balance. Raw Materials Inventory dollar amounts need to be rolled forward to get the ending balance: (Beginning + Produced - Sold = Ending) Raw Materials Inventory dollar amounts need to be rolled forward to get the ending balance: (Beginning + Purchased - Used = Ending) Optima Company Balance Sheet 12/31/2019 Assets Cash $ 250,000.00 Finished goods invenotry 650,000.00 Direct materials inventory 120,000.00 Accounts receivable 225,000.00 Plant, Property, and equipment, net 3,500,000.00 Total assets 4,745,000.00 Liabilities and Stockholders' Equity Accounts Payable $ 90,000.00 Capital Stock 3,000,000.00 Retained earnings 1,655,000.00 Total liabilities and stockholders equity 4,745,000.00