Other data for Goldman Tire Company: AlClick the icon to view the other data.) The Goldman Tire Company manufactures racing tires for bicycles. Goldman sells tires for $80 each. Goldman is planning for the next year by developing a master budget by quarters. Goldman's balance sheet for December 31, 2018, follows: (Click the icon to view the balance sheet.) Read the requirements. Prepare the direct materials budget. Review the production budget you prepared above. Goldman 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 1200 1700 1950 6300 1450 680 Direct materials per tire 580 780 880 880 300 580 680 780 2340 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 More Info C. a. Budgeted sales are 1,200 tires for the first quarter and expected to increase by 250 tires per quarter. 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 300 tires at $36 each. 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 600 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 $7.00 per pound. f. Desired ending Raw Materials Inventory is 20% of the next quarter's direct materials needed for production; desired ending inventory for December 31, 2019 is 600 pounds; indirect materials are insignificant and not considered for budgeting purposes. g. Each tire requires 0.50 hours of direct labor; direct labor costs average $8 per hour. h. Variable manufacturing overhead is $3 per tire. i. Fixed manufacturing overhead includes $5,000 per quarter in depreciation and $7,040 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; $3,000 per quarter for rent; $1,500 per quarter for insurance; and $2,000 per quarter for depreciation. k. Variable selling and administrative expenses include supplies at 2% of sales. 1. 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 65% in the quarter of the sale and 35% 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 70% in the quarter purchased and 30% in the following quarter; December 31, 2018, Accounts Payable is paid in the first quarter of 2019. n. Direct materials purchases are paid 70% in the quarter purchased and 30% 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 $3,500 per quarter and is paid in the quarter incurred. q. Goldman desires to maintain a minimum cash balance of $60,000 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. Assets Current Assets: Cash $ 60,000 Accounts Receivable 50,000 4,200 10,800 Raw Materials Inventory Finished Goods Inventory Total Current Assets Property, Plant, and Equipment: Equipment 125,000 183,000 (83,000) Less: Accumulated Depreciation 100,000 $ 225,000 Total Assets Liabilities Current Liabilities: Accounts Payable $ 9,000 Stockholders' Equity Common Stock, no par $ 125,000 91,000 Retained Earnings Total Stockholders' Equity 216,000 $ 225 nnn Stockholders' Equity Common Stock, no par $ 125,000 91,000 Retained Earnings Total Stockholders' Equity 216,000 225,000 Total Liabilities and Stockholders' Equity