Requirement 3.Trenton sold 7,600 sets in 2019, and its actual operating income was as follows:

Prepare a flexible budget performance report through operating income for 2019.

Show product costs separately from selling and administrative costs. To simplify the calculations due to sets in beginning inventory having a different cost than those produced and sold in

2019, assume the following product

-X * More Info (Unless otherwise noted, assume all of the following events occurred during 2018 and that any balances given are stated as of December 31, 2018.) a. Budgeted sales are 1,500 sets for the first quarter and expected to increase by 200 sets per quarter. Cash sales are expected to be 20% of total sales, with the remaining 80% of sales on account Sets are budgeted to sell for $90 per set. b. Finished Goods Inventory on December 31, 2018, consists of 550 sets at $35 each. c. Desired ending Finished Goods Inventory is 30% of the next quarter's sales; first quarter sales for 2020 are expected to be 2.300 sets. FIFO inventory costing method is used. d. Raw Materials inventory on December 31, 2018, consists of 3.300 pounds. Direct materials requirement is 6 pounds per set. The cost is 1 per pound. e. Desired ending Raw Materials Inventory is 10% of the next quarter's direct materials needed for production; desired ending inventory for December 31, 2019, is 3,300 pounds; indirect materials are insignificant and not considered for budgeting purposes. f. Each set requires 0.20 hours of direct labor: direct labor costs average 10 per hour. g. Variable manufacturing overhead is $2.00 per set. h. Fixed manufacturing overhead includes $6.500 per quarter in depreciation and $3,776 per quarter for other costs, such as utilities, insurance, and property taxes. i. Fixed selling and administrative expenses include $13,000 per quarter for salaries: $3,600 per quarter for rent: $1,500 per quarter for insurance; and $1,000 per quarter for depreciation. j. Variable selling and administrative expenses include supplies at 3% of sales. k. Capital expenditures include $25,000 for new manufacturing equipment, to be purchased and paid for in the first quarter. 1. Cash receipts for sales on account are 80% in the quarter of the sale and 40% in the quarter following the sale: Accounts Receivable balance on December 31, 2018. is expected to be received in the first quarter of 2019; uncollectible accounts are considered insignificant and not considered for budgeting purposes m. Direct materials purchases are paid 70% in the quarter purchased and 30% in the following quarter: Accounts Payable balance on December 31, 2018, is expected to be paid in the first quarter of 2019. 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 quarter and is paid in the quarter incurred. p. Trenton desires to maintain a minimum cash balance of $80.000 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 $1,000; interest is 8% per year and paid at the beginning of the quarter based on the amount outstanding from the previous quarter. Print Done Data Table Trenton Toy Company Balance Sheet December 31, 2018 Assets Current Assets: Cash S 60,000 Accounts Receivable 18,000 3.300 19.250 S 100.550 Raw Materials Inventory Finished Goods Inventory Total Current Assets Property, Plant, and Equipment: Equipment Less: Accumulated Depreciation Total Assets 188,000 (38,000) 149,000 S 249,550 Liabilities Current Liabilities: S 18,000 Accounts Payable Stockholders' Equity Common Stock, no par S Retained Earnings Total Stockholders' Equity 180.000 53,550 233,550 Total Liabilities and Stockholders' Equity S 249,550 Print Done Sales Budget IU Trenton Toy Company Sales Budget For the Year Ended December 31, 2019 First Second Third Quarter Quarter Quarter Fourth Quarter Total 1,500 90||$ 1,700 90 S 1,900 90||$ Budgeted sets to be sold Sales price per unit Total sales 2.100 90||$ 7,200 90 69 $ 135,000 $ 153,000 $ 171,000 $ 189,000 $ 648.000 GU a Print Done be Ad beginning of the quarter when excess funds are available and in increments of 1.000 interes Selling and Administrative Expense Budget 1 Fourth Quarter Total Trenton Toy Company Selling and Administrative Expense Budget For the Year Ended December 31, 2019 First Second Third Quarter Quarter Quarter Salaries Expense $ 13,000 $ 13,000 $ 13,000 $ Rent Expense 3,600 3,600 3,600 Insurance Expense 1,500 1,500 1,500 Depreciation Expense 1,000 1,000 1,000 Supplies Expense 4,050 4,590 5,130 $ Total budgeted selling and administrative expense 23,150 $ 23,690$ 24 230||$ 13.000 $ 52.000 3,600 1,500 1,000 5,670 14,400 6,000 4,000 19,440 24,770||$ 95,840 Print Done 0 . Income Statement Trenton Toy Company Budgeted Income Statement For the Year Ended December 31, 2019 Net Sales Revenue $ 648,000 Cost of Goods Sold 122.990 Gross Profit 525.010 95 840 Selling and Administrative Expenses Operating Income 429,170 Other Income and (Expenses); Interest Expense 0 Income Before Income Taxes 429.170 Income Tax Expense 8,000 Net Income 421,170 S Print Done Data Table $ 684.000 132,753 551.247 Trenton Toy Company Income Statement For the Year Ended December 31, 2019 Net Sales Revenue Cost of Goods Sold Variable 94.149 Fixed 38.604 Gross Profit Selling and Administrative Expenses: Variable 20.520 Fixed 76.400 Operating Income Other Income and (Expenses): Interest Expense Income Before Income Taxes Income Tax Expense Net Income S 96.920 454.327 (200) 454,127 15.000 439,127 Print Done Data Table Variable Fixed Total $ 81.886 S 41,104 $ 122.990 Static budget Flexible budget 93 249 41,104 134.353 Print Done (Label each variances as favorable (F) or unfavorable (U). Enter a "0" for any zero balances. For any $0 vanances, leave the Favorable (F/Unfavorable (U) input blank.) Trenton Toy Company Flexible Budget Performance Report For the Year Ended December 31, 2019 1 2 3 4 5 (1)-(3) (3) - (5) Budget Flexible Sales Amounts Actual Budget Flexible Volume Static Per Unit Results Variance Budget Variance Budget Units 7600 7600 7200 Net Sales Revenue 90 Variable Costs Product Costs Selling and Admin. Costs Contribution Margin Fixed Costs: Product Costs Selling and Admin Costs Operating Income -X * More Info (Unless otherwise noted, assume all of the following events occurred during 2018 and that any balances given are stated as of December 31, 2018.) a. Budgeted sales are 1,500 sets for the first quarter and expected to increase by 200 sets per quarter. Cash sales are expected to be 20% of total sales, with the remaining 80% of sales on account Sets are budgeted to sell for $90 per set. b. Finished Goods Inventory on December 31, 2018, consists of 550 sets at $35 each. c. Desired ending Finished Goods Inventory is 30% of the next quarter's sales; first quarter sales for 2020 are expected to be 2.300 sets. FIFO inventory costing method is used. d. Raw Materials inventory on December 31, 2018, consists of 3.300 pounds. Direct materials requirement is 6 pounds per set. The cost is 1 per pound. e. Desired ending Raw Materials Inventory is 10% of the next quarter's direct materials needed for production; desired ending inventory for December 31, 2019, is 3,300 pounds; indirect materials are insignificant and not considered for budgeting purposes. f. Each set requires 0.20 hours of direct labor: direct labor costs average 10 per hour. g. Variable manufacturing overhead is $2.00 per set. h. Fixed manufacturing overhead includes $6.500 per quarter in depreciation and $3,776 per quarter for other costs, such as utilities, insurance, and property taxes. i. Fixed selling and administrative expenses include $13,000 per quarter for salaries: $3,600 per quarter for rent: $1,500 per quarter for insurance; and $1,000 per quarter for depreciation. j. Variable selling and administrative expenses include supplies at 3% of sales. k. Capital expenditures include $25,000 for new manufacturing equipment, to be purchased and paid for in the first quarter. 1. Cash receipts for sales on account are 80% in the quarter of the sale and 40% in the quarter following the sale: Accounts Receivable balance on December 31, 2018. is expected to be received in the first quarter of 2019; uncollectible accounts are considered insignificant and not considered for budgeting purposes m. Direct materials purchases are paid 70% in the quarter purchased and 30% in the following quarter: Accounts Payable balance on December 31, 2018, is expected to be paid in the first quarter of 2019. 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 quarter and is paid in the quarter incurred. p. Trenton desires to maintain a minimum cash balance of $80.000 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 $1,000; interest is 8% per year and paid at the beginning of the quarter based on the amount outstanding from the previous quarter. Print Done Data Table Trenton Toy Company Balance Sheet December 31, 2018 Assets Current Assets: Cash S 60,000 Accounts Receivable 18,000 3.300 19.250 S 100.550 Raw Materials Inventory Finished Goods Inventory Total Current Assets Property, Plant, and Equipment: Equipment Less: Accumulated Depreciation Total Assets 188,000 (38,000) 149,000 S 249,550 Liabilities Current Liabilities: S 18,000 Accounts Payable Stockholders' Equity Common Stock, no par S Retained Earnings Total Stockholders' Equity 180.000 53,550 233,550 Total Liabilities and Stockholders' Equity S 249,550 Print Done Sales Budget IU Trenton Toy Company Sales Budget For the Year Ended December 31, 2019 First Second Third Quarter Quarter Quarter Fourth Quarter Total 1,500 90||$ 1,700 90 S 1,900 90||$ Budgeted sets to be sold Sales price per unit Total sales 2.100 90||$ 7,200 90 69 $ 135,000 $ 153,000 $ 171,000 $ 189,000 $ 648.000 GU a Print Done be Ad beginning of the quarter when excess funds are available and in increments of 1.000 interes Selling and Administrative Expense Budget 1 Fourth Quarter Total Trenton Toy Company Selling and Administrative Expense Budget For the Year Ended December 31, 2019 First Second Third Quarter Quarter Quarter Salaries Expense $ 13,000 $ 13,000 $ 13,000 $ Rent Expense 3,600 3,600 3,600 Insurance Expense 1,500 1,500 1,500 Depreciation Expense 1,000 1,000 1,000 Supplies Expense 4,050 4,590 5,130 $ Total budgeted selling and administrative expense 23,150 $ 23,690$ 24 230||$ 13.000 $ 52.000 3,600 1,500 1,000 5,670 14,400 6,000 4,000 19,440 24,770||$ 95,840 Print Done 0 . Income Statement Trenton Toy Company Budgeted Income Statement For the Year Ended December 31, 2019 Net Sales Revenue $ 648,000 Cost of Goods Sold 122.990 Gross Profit 525.010 95 840 Selling and Administrative Expenses Operating Income 429,170 Other Income and (Expenses); Interest Expense 0 Income Before Income Taxes 429.170 Income Tax Expense 8,000 Net Income 421,170 S Print Done Data Table $ 684.000 132,753 551.247 Trenton Toy Company Income Statement For the Year Ended December 31, 2019 Net Sales Revenue Cost of Goods Sold Variable 94.149 Fixed 38.604 Gross Profit Selling and Administrative Expenses: Variable 20.520 Fixed 76.400 Operating Income Other Income and (Expenses): Interest Expense Income Before Income Taxes Income Tax Expense Net Income S 96.920 454.327 (200) 454,127 15.000 439,127 Print Done Data Table Variable Fixed Total $ 81.886 S 41,104 $ 122.990 Static budget Flexible budget 93 249 41,104 134.353 Print Done (Label each variances as favorable (F) or unfavorable (U). Enter a "0" for any zero balances. For any $0 vanances, leave the Favorable (F/Unfavorable (U) input blank.) Trenton Toy Company Flexible Budget Performance Report For the Year Ended December 31, 2019 1 2 3 4 5 (1)-(3) (3) - (5) Budget Flexible Sales Amounts Actual Budget Flexible Volume Static Per Unit Results Variance Budget Variance Budget Units 7600 7600 7200 Net Sales Revenue 90 Variable Costs Product Costs Selling and Admin. Costs Contribution Margin Fixed Costs: Product Costs Selling and Admin Costs Operating Income