! Required information 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 sell its product to retsilers throughout the northeastern quadrant 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 December 31, 2015 Assets Current assets: Cash Accounts receivable (net) 250, Rawaterials inventory (4,500 yards) 11.25 Finished goods inventory (1,see units) 32,250 Total current assets $ 34,00 Plant and equipment: Buildings and equipment Accumulated depreciation 292,0) Plant and equipment, net 688, Total assets $957,700 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $158,82 Stockholders' muity Common stock $ 419,00 Retained earnings 379,00 Total stockholders equity 799,00 Total liabilities and stockholders' equity $957.100 The company's cher financial officer (CFO). In consultation with various managers scross the organization has developed the following set of assumptions to help create the 2017 budget 2. 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 - 13.000 units. 2 All sales are on credit Uncollect ble accounts are negligible and can be ignored. Seventy-five percent of all credit zales 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 unt sales. 4 Esch unit of finished goods requires 3.5 yards of raw material that costs $3.00 per yard. Esch custer's ending raw materials inventory should equal 10% of the next quarter's production needs. The estimated ending raw materials Inventory on December 31, 2017 5,000 yards 5. Seventy percent of each quarter's purchases sre paid for in the quarter of purchase. The remaining 30% of each quarter's purchases are paid in the following quarter. 6. Direct laborers erepeld 1 an hour and each unit of finished goods requires 0.25 direct labor-hours to complete. All direct labor costs are paid in the quarter incurred 7. The budgeted variable manufacturing overhes per direct labor-hour is $3.00. The quarterly fixed manufacturing overhesd $150,000 Including $20.000 of depreciation on equipment. The number of direct labor-hours sured ss the allocation base for the budgeted plantvide overhead rate. All overhead costs excluding depreciation are paid in the quarter incurred 8. The budgeted variable selling and administrative expense is $1.25 per unit sold. The fixed selling and administrative expenses per quarter include advertising $25,000), executive salaries ($64.000). Insurance ($12.000, property tax $8.0001.snd depreciation expense ($8,000). All selling and administrative expenses (excluding depreciation are paid in the quarter incurred 9. The company plans to maintains minimum cssh balance at the end of esch 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 borrowing 10. Dividends of $15.000 will be declared and paid in each quarter. IL 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 recently completed finished goods are the firstout" to customers Required: 1. Calculate the following budgeted figures for 2017: a. The total forced cost. b. The variable cost per un sold c. The contribution margin per un sold. d. The break-even point in unit sales and dollar sales. e. The margin of safety The degree of operating leverage 2. Prepare a budgeted variable costing income statement for 2017. Stop your computations at net operating income