PREPARE THE CASH PAYMENT BUDGET
Additional Info to complete the chart above:
Cash Payments First Third Fourth Second Quarter Quarter Quarter Quarter Total direct material First Second Third Fourth Quarter Quarter Quarter Quarter Cash Payments Direct Materials Accounts Payable balance, December 31, 2018 1st QtrQtr. 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. 3rd Qt. Qur. 3 direct material purchases paid in Qtr. 3 3rd Qur. Qtr 3 direct material purchases paid in Qtr. 4 4th Qur-Qtr 4 direct material purchases paid in Qtr. 4 Total payments for direct materials Direct Labor Total payments for direct labor Reference Fourth Quarter 2,040 Total 1,840 6,640 Gilder Tire Company Direct Materials Budget For the Year Ended December 31, 2019 First Second Third Quarter Quarter Quarter Budgeted tires to be produced 1,120 1,640 Direct materials per tire Direct materials needed for production 2.240 3,680 Plus Desired direct materials in ending inventory 1,312 Total direct materials needed 3,552 4.752 5,312 1,200 Less Direct materials in beginning inventory 1.312 1.472 Budgeted purchases of direct materials 3,440 9.50 9.50 $ 9.50 $ Direct materials cost per pound 22.344 32,680 $ 36,480 $ Budgeted cost of direct materials 3,280 4.080 1.200 13,280 1,200 5.280 1,632 14,480 1,200 2,352 3.840 3.648 9.50 S 13.280 9.50 34.656 $ 126, 160 Done Gilder Tire Company Direct Labor Budget For the Year Ended December 31, 2019 First Second | Third Quarter Quarter Quarter Total Fourth Quarter 2.040 0.20 1.120 1,840 1.640 0.20 6,640 0.20 0.20 Budgeted tires to be produced Direct labor hours per unit Direct labor hours needed for production Direct labor cost per hour Budgeted direct labor cost 224 368 408 1,328 328 10 2.240 3.280 S 3,680$ 4080$ 13,280 Reference Manufacturing Overhead Budget For the Year Ended December 31, 2019 First Second Third Quarter Quarter Fourth Quarter Quarter Total 1.120 1,640 1,840 2,040 6,640 IS 4,480 S 6,560 7.360 $ Budgeted tires to be produced VOH cost per tire Budgeted VOH Budgeted FOH Depreciation Utilities, insurance, property taxes Total budgeted FOH 8,160 $ 26,560 2.000 2,000 5.968 2,000 5.968 2,000 5,968 5,968 7,968 8.000 23,872 7,968 7.968 7.968 31,872 Budgeted manufacturing overhead costs 12.448 14,528 15.328 $ 16.128 $ 58.432 224 328 40B 1,328 Direct labor hours Budgeted manufacturing overhead costs Predetermined overhead allocation rate Total Gilder Tire Company Selling and Administrative Expense Budget For the Year Ended December 31, 2019 First Second Third Fourth Quarter Quarter Quarter Quarter Salaries Expense 12,000 $ 12,000 12.000 s 12.000 Rent Expense 5.700 5.700 5.700 5,700 Insurance Expense 600 600 600 Depreciation Expense 500 500 500 500 2,240 2.560 Supplies Expense 2.880 21,040 $ 21,360 21,680 22,000 Total budgeted selling and administrative expense 600 48,000 22,800 2.400 2.000 10.880 86,080 3.200 Budgeted sales are 1,400 tires for the first quarter and expected to increase by 200 tires per quarter. Cash sales are expected to be 40% of total sales, with the remaining 60% of sales on account. Finished Goods Inventory on December 31, 2018 consists of 600 tires at $36 each. Desired ending Finished Goods Inventory is 20% 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 1,200 pounds of rubber compound used to manufacture the tires. e. Direct materials requireents 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 1.200 pounds indirect materials are insignificant and not considered for budgeting purposes g. Each tire requires 0.20 hours of direct labor, direct labor costs average $10 per hour. h. Variable manufacturing overhead is $4 per tire, 1 Fixed manufacturing overhead includes $2,000 per quarter in depreciation and $5.968 per quarter for other costs, such as utilities, insurance, and property taxes. 1. Fixed selling and administrative expenses include $12,000 per quarter for salaries: $5,700 per quarter for rent; $600 per quarter for insurance; and $500 per quarter for depreciation 3 k. Variable selling and administrative expenses include supplies at 2% of sales. 1 Capital expenditures include $10,000 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 insianificant and not considered for budaetina purposes... Donal More Info 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 1,200 pounds; indirect materials are insignificant and not considered for budgeting purposes. Each tire requires 0.20 hours of direct labor; direct labor costs average $10 per hour. h. Variable manufacturing overhead is $4 per tire. Fixed manufacturing overhead includes $2,000 per quarter in depreciation and $5,968 per quarter for other costs, such as utilities, insurance, and property taxes j. Fixed selling and administrative expenses include $12,000 per quarter for salaries: $5.700 per quarter for rent: $600 per quarter for insurance, and $500 per quarter for depreciation k. Variable selling and administrative expenses include supplies at 2% of sales. I. Capital expenditures include $10,000 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 insignifidant and not considered for budgeting purposes. n. Direct materials purchases are paid 90% in the quarter purchased and 10% 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 $4,000 per quarter and is paid in the quarter incurred. q. Gilder desires to maintain a minimum cash balance of $35.000 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 8% per year and paid at the beginning of the quarter based on the amount outstanding from the previous quarters i Data Table 40.000 35.000 11.400 21.600 108.000 150.000 (68,000) 82.000 Cash Accounts Receivable Raw Materials Inventory Finished Goods Inventory Total Current Assets Property, Plant, and Equipment: Equipment Less: Accumulated Depreciation Total Assets Liabilities Current Liabilities: Accounts Payable Stockholders' Equity Common Stock, no par Retained Earnings Total Stockholders' Equity Tntall abilities and Stockholdere Fru $ 190,000 S 10.000 110,000 70.000 180.000 190,000 $
