Other data for Giseppe Tire Company: (Click the icon to view the other data.) The Giseppe Tire Company manufactures racing tires for bicycles. Giseppe sells tires for $80 each. Giseppe is planning for the next year by developing a master budget by quarters. Giseppe's balance sheet for December 31, 2018, follows: (Click the icon to view the balance sheet.) Read the requirements. Requirement 1. Prepare Giseppe's operating budget and cash budget for 2019 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 preparing the sales budget. Giseppe Tire Company Sales Budget For the Year Ended December 31, 2019 First Second Third Fourth Quarter Quarter Quarter Quarter 1,600 1,750 1,900 2,050 $ 80 | $ 80 $ 80 || $ 80 | $ Budgeted tires to be sold Total 7,300 80 Sales price per unit $ 128,000 $ 140,000 | $ 152,000 || $ 164,000 || $ 584,000 Total sales Prepare the production budget. Review the sales budget you prepared above. Review the sales budget you prepared above. Giseppe Tire Company Production Budget For the Year Ended December 31, 2019 First Second Third Fourth Quarter Quarter Quarter Quarter Total Budgeted tires to be sold 1,750 1,600 700 1,900 820 2,050 880 7,300 880 760 Plus: Desired tires in ending inventory Total tires needed 2,510 2,720 2,930 2,300 200 700 8,180 200 Less: 820 Tires in beginning inventory 760 2,100 1,810 1,960 2,110 7,980 Budgeted tires to be produced Prepare the direct materials budget. Review the production budget you prepared above. Giseppe Tire Company Direct Materials Budget Review the production budget you prepared above. Giseppe Tire Company Direct Materials Budget For the Year Ended December 31, 2019 First Second Quarter Quarter 2,100 1,810 Third Fourth Quarter Quarter Total Budgeted tires to be produced 1,960 2,110 7,980 Direct materials per tire Direct materials needed for production 4,200 4,220 3,620 1,568 3,920 1,688 15,960 400 Plus: Desired direct materials in ending inventory 1,448 400 5,648 400 5,608 1,568 4,620 1,688 16,360 400 Total direct materials needed Less: Direct materials in beginning inventory Budgeted purchases of direct materials Direct materials cost per pound 5,248 9.50 5,188 1,448 3,740 || 9.50 $ 35,530 || $ $ 4,040 9.50 $ 38,380 | $ 2,932 | 9.50 $ 27,854 | $ 15,960 9.50 151,620 Budgeted cost of direct materials 49,856 | $ Prepare the direct labor budget. (Enter any hours per unit amounts to two decimal places, X.XX, and round all other amounts to the nearest whole number.) D...-... L .--.d...1!-- L..dont J-Lo... Review the production budget you prepared above. Giseppe Tire Company Direct Labor Budget For the Year Ended December 31, 2019 First Second Third Fourth Quarter Quarter Quarter Quarter Total Budgeted tires to be produced 1,810 2,100 0.40 1,960 0.40 2,110 0.40 7,980 0.40 Direct labor hours per unit 0.40 Direct labor hours needed for production Direct labor cost per hour 840 20||$ 16,800 $ 724 20||$ 14,480 || $ 784 20||$ 15,680 $ 844 20 $ 16,880 | $ 3,192 20 63,840 Budgeted direct labor cost Prepare the manufacturing overhead budget. (Abbreviations used: VOH = variable manufacturing overhead; FOH = fixed manufacturing overhead.) Review the production budget you prepared above. Review the direct labor budget you prepared above. Giseppe Tire Company Manufacturing Overhead Budget Giseppe Tire Company Manufacturing Overhead Budget For the Year Ended December 31, 2019 First Second Third Fourth Quarter Quarter Quarter Quarter 2,100 | 1,810 1,960 2,110 | $ 1||$ 1 $ 1|$ 1||$ Total Budgeted tires to be produced 7,980 VOH cost per tire 1 7,980 $ 2,100 $ 1,810 | $ 1,960 | $ 2,110 | $ Budgeted VOH Budgeted FOH Depreciation Utilities, insurance, property taxes 3,000 14,157 3,000 14,157 3,000 14,157 3,000 14,157 12,000 56,628 17,157 17,157 Total budgeted FOH 17,157 17,157 68,628 57 18,967 19,117 19,267 $ 76,608 Budgeted manufacturing overhead costs Direct labor hours 840 724 784 844 | Budgeted manufacturing overhead costs $ $ 3,192 76,608 24 Predetermined overhead allocation rate Enter any number in the edit fields and then click Check Answer, Before preparing the cost of goods sold budget, calculate the projected manufacturing cost per tire for 2019. (Round all amounts to the nearest cent.) 19.00 Direct materials cost per tire Direct labor cost per tire 8.00 9.60 Manufacturing overhead cost per tire $ 36.60 Total projected manufacturing cost per tire for 2019 Now prepare the cost of goods sold budget. Review the sales budget you prepared above. Review the production budget you prepared above. Giseppe Tire Company Cost of Goods Sold Budget For the Year Ended December 31, 2019 First Second Third Fourth Quarter Quarter Quarter Quarter Total $ Beginning inventory Tires produced and sold in 2019 6,800 51,240 58,040 $ $ 64,050 || $ 64,050 | $ 69,540 69,540 $ $ $ 75,030 | 75,030 $ 6,800 259,860 266,660 $ Total budgeted cost of goods sold Enter any number in the edit fields and then click Check Answer. Prepare the selling and administrative expense budget. Review the sales budget you prepared above. Giseppe Tire Company Selling and Administrative Expense Budget For the Year Ended December 31, 2019 First Second Third Fourth Total Quarter 14,000 $ $ Salaries Expense Rent Expense 3,600 Quarter 14,000 | $ 3,600 900 1,000 4,920 Insurance Expense Quarter Quarter $ 14,000 || $ 14,000 3,600 3,600 900 1,000 4,200 4,560 $ 23,700 $ 24,060 900 1,000 900 1,000 3,840 23,340 56,000 14,400 3,600 4,000 17,520 Depreciation Expense Supplies Expense Total budgeted selling and administrative expense $ 24,420 95,520 Prepare the cash receipts budget. (lf a box is not used in the table leave the box empty; do not enter a zero.) Review the sales budget you prepared above. Cash Receipts from Customers Giseppe Tire Company Balance Sheet December 31, 2018 Assets Current Assets: Cash Accounts Receivable 70,000 25,000 3,800 6,800 Raw Materials Inventory Finished Goods Inventory Total Current Assets Property, Plant, and Equipment: $ 105,600 Equipment 183,000 (106,000) $ 77,000 Less: Accumulated Depreciation 182,600 Total Assets Liabilities Current Liabilities: Accounts Payable $ 15,000 Stockholders' Equity Property, Plant, and Equipment: Equipment 183,000 (106,000) Less: Accumulated Depreciation 77,000 $ 182,600 Total Assets Liabilities Current Liabilities: Accounts Payable $ 15,000 Stockholders' Equity $ Common Stock, no par 130,000 37,600 Retained Earnings Total Stockholders' Equity 167,600 182,600 Total Liabilities and Stockholders' Equity Property, Plant, and Equipment: Equipment 183,000 (106,000) Less: Accumulated Depreciation 77,000 $ 182,600 Total Assets Liabilities Current Liabilities: Accounts Payable $ 15,000 Stockholders' Equity $ Common Stock, no par 130,000 37,600 Retained Earnings Total Stockholders' Equity 167,600 182,600 Total Liabilities and Stockholders' Equity (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 1,600 tires for the first quarter and expected to increase by 150 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, 2018 consists of 200 tires at $34 each. c. Desired ending Finished Goods Inventory is 40% of the next quarter's sales; first quarter sales for 2020 are expected be 2,200 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 $9.50 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 0.40 hours of direct labor; direct labor costs average $20 per hour. h. Variable manufacturing overhead is $1 per tire. i. Fixed manufacturing overhead includes $3,000 per quarter in depreciation and $14,157 per quarter for other costs, such as utilities, insurance, and property taxes. j. Fixed selling and administrative expenses include $14,000 per quarter for salaries; $3,600 per quarter for rent; $900 per quarter for insurance; and $1,000 per quarter for depreciation. k. Variable selling and administrative expenses include supplies at 3% of sales. Capital expenditures include $30,000 for new manufacturing equipment, to be purchased and paid in the first quarter. m. Cash receipts for sales on account are 60% in the quarter of the sale and 40% in the quarter following the sale; December 31, 2018, Accounts Receivable is received in the first quarter of 2019; ir 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. Income tax expense is projected at $3,500 per quarter and is paid in the quarter incurred. Giseppe desires to maintain a minimum cash balance of $70,000 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 6% per year and paid at the beginning of the quarter based on the amount outstanding from the previous quarter. Giseppe Tire Company Direct Materials Budget For the Year Ended December 31, 2019 First Second Quarter Quarter Third Fourth Quarter Quarter Total Budgeted tires to be produced 2,100 1,960 2,110 7,980 Direct materials per tire Direct materials needed for production 4,200 1,448 3,620 1,568 3,920 1,688 4,220 400 15,960 400 Plus: Desired direct materials in ending inventory Total direct materials needed 5,648 400 5,188 1,448 5,608 1,568 4,620 1,688 16,360 400 Less: Direct materials in beginning inventory Budgeted purchases of direct materials Direct materials cost per pound 5,248 9.50 $ 49,856 $ 3,740 9.50 $ 35,530 $ 4,040 9.50 $ 38,380||$ 2,932 9.50 $ 27,854 $ 15,960 9.50 151,620 Budgeted cost of direct materials Giseppe Tire Company Direct Labor Budget For the Year Ended December 31, 2019 First Second Third Fourth Quarter Quarter Quarter Quarter Total Budgeted tires to be produced 2,100 1,810 0.40 1,960 0.40 2,110 0.40 7,980 0.40 Direct labor hours per unit 0.40 Direct labor hours needed for production 840 784 844 3,192 Direct labor cost per hour 724 - 20 14,480 $ 20 20 20 $ 15,680 $ 16,880 $ 63,840 Budgeted direct labor cost Giseppe Tire Company Manufacturing Overhead Budget For the Year Ended December 31, 2019 First Second Third Quarter Quarter Quarter Fourth Quarter Total Budgeted tires to be produced 2,100 1,810|| 1,960 2,110 7,980 6 VOH cost per tire Budgeted VOH Budgeted FOH 6 2,100 $ 1,810 $ 1,960 $ 2,110 $ 7,980 Depreciation 3,000 3,000 14,157 12,000 56,628 14,157 Utilities, insurance, property taxes 3,000 14,157 17,157| 19,257||$ 3,000 14,157 17,157 18,967 $ Total budgeted FOH 17,157 17,157 68,628 $ 19,117||$ 19,267||$ 76,608 Budgeted manufacturing overhead costs 840 724 784 844 Direct labor hours Budgeted manufacturing overhead costs 3,192 76,608 $ EA 24 Predetermined overhead allocation rate Giseppe Tire Company Selling and Administrative Expense Budget For the Year Ended December 31, 2019 First Second Third Quarter Quarter Quarter Fourth Quarter Total $ 14,000 $ 3,600 Salaries Expense Rent Expense Insurance Expense Depreciation Expense 14,000 $ 3,600 900 1,000 900 14,000 $ 3,600 900 1,000 4,560 14,000 $ 3,600 900 1,000 4,920 24,420 $ 56,000 14,400 3,600 4,000 17,520 1,000 3,840 Supplies Expense 4,200 23,340 $ 23,700 24,060 $ 95,520 Total budgeted selling and administrative expense Cash Payments Fourth First Second Third Quarter Quarter Quarter $ 49,856 | $ 35,530 | $ 38,380 Quarter Total Total direct materials purchases $ 27,854 | $ 151,620 First Second Third Fourth Quarter Quarter Quarter Quarter Total Cash Payments Direct Materials: $ 15,000 39,885 $ 9,971 28,424 Accounts Payable balance, December 31, 2018 1st Qtr.Qtr. 1 direct material purchases paid in Qtr. 1 1st Qtr.Qtr. 1 direct material purchases paid in Qtr. 2 2nd Qtr.Qtr. 2 direct material purchases paid in Qtr. 2 2nd Qtr.Qtr. 2 direct material purchases paid in Qtr. 3 3rd Qtr.Qtr. 3 direct material purchases paid in Qtr. 3 3rd Qtr. Qtr. 3 direct material purchases paid in Qtr. 4 4th Qtr.Qtr. 4 direct material purchases paid in Qtr. 4 $ 7,106 30,704 $ 7,676 22,283 54,885 38,395 37,810 29,959 $ 161,049 Total payments for direct materials Direct Labor: Total payments for direct labor 16,800 | 14,480 || 15,680 | 16,880 63,840 Manufacturing Overhead: Total payments for manufacturing overhead Selling and Administrative Expenses: Total payments for Selling and Admin. expenses