Ringo Inc. makes luxury indoor shoes in one style, but in Regular and Deluxe. The Regular shoes have cloth soles, and the Deluxe shoes have cloth-covered natural rubber soles. Ringo Inc. is preparing its budget for June 2024 and has estimated sales based on past experience. Information for the month of June is as follows: Input Prices Direct materials: Cloth $4.96 per yard Rubber $5.95 per board foot Direct manufacturing labor $17.00 per direct manufacturing labor-hour Input Quantities per Unit of Output (per pair of shoes) Regular Deluxe Direct materials Cloth 1.30 yards 1.55 yards Rubber 0 2 b.f. Direct manufacturing labor-hours (DMLH) 3.5 hours 5.15 hours Setup-hours per batch 2 hours 3 hours Inventory Information, Direct Materials Cloth Rubber Beginning inventory 615 yards 840 b.f. Target ending inventory 450 yards 315 b.f. Cost of beginning inventory $3,030 $4,968 Ringo Inc. accounts for direct materials using a FIFO cost-flow assumption. Sales and Inventory Information, Finished Goods Regular Deluxe Expected sales in units (pairs of shoes) 2,100 3,100 Selling price $89,99 $139.99 Target ending inventory in units 510 615 Beginning inventory in units 330 650 Beginning inventory in dollars $21,500 $64,200 Ringo Inc. uses a FIFO cost-flow assumption for finished-goods inventory. All the shoes are made in batches of 50 pairs of shoes. Ringo Inc. incurs manufacturing overhead costs, marketing and general administration, and shipping costs. Besides materials and labor, manufacturing costs include setup, processing, and inspection costs. Ringo Inc. ships 40 pairs of shoes per shipment. Ringo Inc. uses activity-based costing and has classified all overhead costs for the month of June as shown in the following chart: 3 Cost Type Denominator Activity Rate Manufacturing Setup Setup-hours $ 23.35 per setup-hour Processing Direct manufacturing labor-hours (DMLH) $1.25 per DMLH Inspection Number of pairs of shoes $1.10 per pair Nonmanufacturing Marketing and general administration Sales revenue 5.75% Shipping Number of shipments $ 12.35 per shipment 2. Ringo Inc.s balance sheet as of May 31 is as follows: Ringo Inc. Company Inc. Balance Sheet as of May 31 Assets Cash $21,732 Accounts receivable $245,500.00 Less: Allowance for bad debts (9,820) 235,680 Inventories Direct materials 7,998 Finished goods 85,700 Fixed assets $1,001,100 Less: Accumulated depreciation (145,200) 855,900 Total assets $1,207,010 Liabilities and Equity Accounts payable $27,470 Taxes payable 24,190 Interest payable $1,080.00 Long-term debt 180,000 Common stock 300,000 Retained earnings 674,270 Total liabilities and equity $1,207,010 Additional information: a. All sales are on account; 60% are collected in the month of the sale, 36% are collected the following month, and 4% are never collected and written off as bad debts. b. All purchases of materials are on account. Ringo Inc. pays for 65% of purchases in the month of purchase and 35% in the following month. c. All other costs are paid in the month incurred, including the declaration and payment of a $25,000 cash dividend in June. d. Ringo Inc. is making monthly interest payments of 0.6% (7.2% per year) on a $180,000 long-term loan. e. Ringo Inc. plans to pay the $24,190 taxes owed as of May 31 in the month of June. Income tax expense for June is zero. f. 24% of processing, setup, and inspection costs and 16% of marketing and general administration and shipping costs are depreciation. 3. Prepare a budgeted income statement for June and a budgeted balance sheet for Ringo Inc. as of June 30, 2024.