P22-41A Completing a comprehensive budgeting problem-manufacturing company The Goldberg Tire Compiny manufactures racing tires for bicycles. Goldberg sells tires for $50 each. Goldberg is planning for the nexc year by developing a master budget by quarters. Goldberg's balance sheet for December 31, 2014, follows: Learning Objectives : 1) 30 Qur DM ourchases $ : 4. Qtr colal cationts 54 h. Fixed manufacturing overhead includes $3,000 per quarter in depreciation and $4,232 per quarter for other costs, such as utilities, insurance, and property taxes. i. Fixed selling and administrative expenses include $9,000 per quarter for salaries; $3,000 per quarter for rent, $600 per quarter for insurance; and $500 per quarter for depreciation. j. Variable selling and administrative expenses include supplies at 1% of sales. k. Capital expenditures include $20,000 for new manufacturing equipment, to be purchased and paid in the first quarter. 1. Cash receipts for sales on account are 50% in the quarter of the sale and 50% in the quarter following the sale; December 31, 2014, Accouns Receivable is received in the first quarter of 2015; uncollectible accounts are considered insignificant and not considered for budgeting purposes. m. Direct materials purchases are paid 75% in the quarter purchased and 25% in the following quarter: December 31, 2014, Accouncs Payable is paid in the first quarter of 2015. n. Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred. o. Income tax expense is projected at $2,000 per quarrer and is paid in the quarter incurred. p. Goldberg desires to maintain a minimum cash balance of $25,000 and borrows from the local bank as needed in increments of $1,000 ar the beginning of the quarter; principal repayments are made at the bcginning 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 quarrer. Requirements 1. Prepare Goldberg's operating budget and cash budget for 2015 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 administrarive expense budget, cash reipts, cash payments, and cash budget. Manuficturing overhead costs are allocated based on direct labor hours. 2. Prepare Goldberg's annual financial budget for 2015 , including budgeted income statement, budgeted balance sheet, and budgeted statement of cash flows. Other dara for Goldberg Tire Company: a. Budgered sales are 900 tires for the first quarter and expected to increase by 100 tires per quarter. Cash sales are expected to be 30% of total sales, with the remaining 70% sales on account. b. Finished Goods Inventory on December 31 consisrs of 200 tires ar $29 each. c. Desired ending Finished Goods Inventory is 40% of the next quarter's sales: first quarter sales for 2016 are expected be 1,300 tires. FIFO inventory costing method is used. d. Direct marerials cost is $15 per tire. e. Desired ending Raw Materials Inventory is 20% of the next quarrer's direct materials needed for production; desired ending inventory for December 31 is $3,000; indirect materials are insignificant and not considered for budgeting purposes. f. Each tire requires 0.20 hours of direct labor: direct labor costs average $18 per hour g. Vuriable manufacturing overhead is $2 per tire. P22-41A Completing a comprehensive budgeting problem-manufacturing company The Goldberg Tire Compiny manufactures racing tires for bicycles. Goldberg sells tires for $50 each. Goldberg is planning for the nexc year by developing a master budget by quarters. Goldberg's balance sheet for December 31, 2014, follows: Learning Objectives : 1) 30 Qur DM ourchases $ : 4. Qtr colal cationts 54 h. Fixed manufacturing overhead includes $3,000 per quarter in depreciation and $4,232 per quarter for other costs, such as utilities, insurance, and property taxes. i. Fixed selling and administrative expenses include $9,000 per quarter for salaries; $3,000 per quarter for rent, $600 per quarter for insurance; and $500 per quarter for depreciation. j. Variable selling and administrative expenses include supplies at 1% of sales. k. Capital expenditures include $20,000 for new manufacturing equipment, to be purchased and paid in the first quarter. 1. Cash receipts for sales on account are 50% in the quarter of the sale and 50% in the quarter following the sale; December 31, 2014, Accouns Receivable is received in the first quarter of 2015; uncollectible accounts are considered insignificant and not considered for budgeting purposes. m. Direct materials purchases are paid 75% in the quarter purchased and 25% in the following quarter: December 31, 2014, Accouncs Payable is paid in the first quarter of 2015. n. Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred. o. Income tax expense is projected at $2,000 per quarrer and is paid in the quarter incurred. p. Goldberg desires to maintain a minimum cash balance of $25,000 and borrows from the local bank as needed in increments of $1,000 ar the beginning of the quarter; principal repayments are made at the bcginning 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 quarrer. Requirements 1. Prepare Goldberg's operating budget and cash budget for 2015 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 administrarive expense budget, cash reipts, cash payments, and cash budget. Manuficturing overhead costs are allocated based on direct labor hours. 2. Prepare Goldberg's annual financial budget for 2015 , including budgeted income statement, budgeted balance sheet, and budgeted statement of cash flows. Other dara for Goldberg Tire Company: a. Budgered sales are 900 tires for the first quarter and expected to increase by 100 tires per quarter. Cash sales are expected to be 30% of total sales, with the remaining 70% sales on account. b. Finished Goods Inventory on December 31 consisrs of 200 tires ar $29 each. c. Desired ending Finished Goods Inventory is 40% of the next quarter's sales: first quarter sales for 2016 are expected be 1,300 tires. FIFO inventory costing method is used. d. Direct marerials cost is $15 per tire. e. Desired ending Raw Materials Inventory is 20% of the next quarrer's direct materials needed for production; desired ending inventory for December 31 is $3,000; indirect materials are insignificant and not considered for budgeting purposes. f. Each tire requires 0.20 hours of direct labor: direct labor costs average $18 per hour g. Vuriable manufacturing overhead is $2 per tire