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Use this information for the questions IE-9 through IE-12 The following information applies to the questions displayed below Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells ts product to retallers throughout the northeastern quedrant of the United States It is in the process of creating a master budget for 2017 and reports a balance sheet at December 31, 2016 as follows Endless Mountain Company Balance Sheet Assets Current assets Accounts recelvable (net) Raw materials inventory 14.500 yards) Finished goods inventory (1.500 units) s 46200 260.000 1250 32.250 Total current assets Plant and equipment 5349.700 Buildings and equipment (292,000 Plant end equipment, net Total assets 608,000 $ 957700 Liablities and Stockholders' Equity Current liabilities: Accounts payable Stockholders equity 158.000 Common stock $ 419,800 379,900 Retained earnings Total stockholders' equity 799.700 957700 Total liabilities and stockholders equity The company's chief financial officer (CFOJ, in consultation with various managers across the organization has developed the following set of assumptions to help create the 2017 budget: 1. The budgeted unit sales are 12,000 units, 37,000 units, 15,000 units, and 25,000 units for quarters 1-4, respectively, Notice that the company experiences peak sales in the second and fourth quarters. The budgeted selling price for the year is $32 per unit. The budgeted unit sales for the first quarter of 2018 is 13,000 units. l sales are on credit. Uncollectible accounts are negligible and can be lignored. Seventy-five percent of all credit sales are collected in the quarter of the sale and 25% are collected in the subsequent quarter. 3, Each quarter's ending finished goods inventory should equal 15% of the next quarter's unit sales. 4. Each unit of finished goods requires 3.5 yards of raw material that costs $3.00 per yard. Each quarter's ending raw materials 5. Seventy percent of each quarter's purchases are paid for in the quarter of purchase. The remaining 30% of each quarter's 6. Direct laborers are paid $18 an hour and each unit of finished goods requires 0.25 direct labor-hours to 7. The budgeted variable manufacturing overhead per direct labor-hour is $3.00. The quarterly fixed manufacturing overhead is inventory should equal 10% of the next quarter's production needs. The estimated ending raw materials inventory on December 31, 2017 is 5,000 yards purchases are paid in the following quarter complete. All direct labor costs are paid in the quarter incurred $150.000 including $20,000 of depreciation on equipment. The number of direct labor-hours is used as the allocation base for the budgeted plantwide overhead rate. All overhead costs (excluding depreciation) are paid in the quarter incurred 8. The budgeted variable selling and administrative expense is $1.2 5 per unit sold. The fixed selling and administrative expenses per quarter include advertising ($25.000), executive salaries ($64,000) insurance ($12.000, property tax ($8,000), and depreciation expense ($8.000). All selling and administrative expenses (excluding depreciation) are paid in the quarter Incurred 9. The company plans to maintain a minimum cash balance at the end of each quarter of $30,000. Assume that any borrowings take place on the first day of the quarter. To the extent possible, the company will repay principal and interest on any borrowings on the last day of the fourth quarter. The company's lender imposes a simple interest rate of 3% per quarter on any 10. Dividends of $15,000 will be declared and paid in each quarter 1t. The company uses a last-in, first-out (LIFO) inventory flow assumption. This means that the most recently purchased raw materials are the "first-out" to production and the most recenty completed finished goods are the "frst-out to customers
