Score: 4.18 of 20 pts 1 of 1 (1 complete) HW Score: 20.92%, 4.18 of 2 Question Help P22-41A (similar to) The Gridley Tire Company manufactures racing tires for bicycles. Gridiey sells tires for $80 each. Gridley is planning for the next year by developing a master budget by quarters. Gridley's balance sheet for December 31, 2018, follows: (Click the icon to view the balance sheet.) Other data for Gridley Tire Company: (Click the icon to view the other data.) Read the requirements Requirement 1. Prepare Gridley's operating budget and cash budget for 2019 by quarter. Required schedules and budgets include: sales budget, production budget, direct materials budget, direct labor budget, manufacturing overhead budget, cost of goods sold budget, selling and administrative expense budget schedule of cash receipts, schedule of cash payments, and cash budget. Manufacturing overhead costs are allocated based on direct labor hours. Round all calculations to the nearest dollar. Begin by preparing the sales budget. Choose from any list or enter any number in the input fields and the - X i Data Table Gridley Tire Company Balance Sheet December 31, 2018 Assets Current Assets: Cash $ 64,000 32,000 2,800 5,600 Accounts Receivable Raw Materials Inventory Finished Goods Inventory Total Current Assets Property, Plant, and Equipment Equipment Less: Accumulated Depreciation $ 104,400 142.000 (39,000) $ 103.000 207,400 Total Assets Liabilities 10,000 Current Liabilities: Accounts Payable Stockholders' Equity Common Stock, no par S 160,000 37,400 Retained Earnings Total Stockholders Equity s Total Liabilities and Stockholders Equity 197 400 207 400 Unless otherwise noted, assume all of the following events occurred during 2018 and that any balances given re stated as of December 31, 2018.) Budgeted sales are 1,600 tires for the first quarter and expected to increase by 200 tires per quarter. Cash 3. 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 200 tires at $28 each, Desired ending Finished Goods Inventory is 50% of the next quarter's sales; first quarter sales for 2020 Kre expected be 2,400 tires. FIFO inventory costing method is used. Raw Materials Inventory on December 31, 2018, consists of 400 pounds of rubber compound used to manufacture the tires. Direct materials requirements are 2 pounds of a rubber compound per tire. The cost of the compound is $7.00 per pound. Desired ending Raw Materials Inventory is 20% of the next quarter's direct materials needed for production; desired ending Inventory for December 31, 2019 is 400 pounds; indirect materials are insignificant and not considered for budgeting purposes. g. Each tire requires 0.70 hours of direct labor, direct labor costs average $14 per hour. h. Variable manufacturing overhead is $1 per tire Fixed manufacturing overhead includes $5,000 per quarter in depreciation and $68.100 per quarter for other costs, such as utilities, insurance, and property taxes Fixed selling and administrative expenses include $9,500 per quarter for salaries; $1,800 per quarter for rent: $1,350 per quarter for insurance; and $500 per quarter for depreciation k Variable selling and administrative expenses include supplies al 1% of sales. Capital expenditures include $40,000 for new manufacturing equipment to be purchased and paid in the first quarter Cash receipts for sales on account are 75% in the quarter of the sale and 25% in the quarter following the sale: December 31, 2018 Accounts Receivable is received in the first quarter of 2019, uncollectible accounts are considered insignificant and not considered for budgeting purposes Direct materials purchases are paid 50% in the quarter purchased and 50% in the following quarter. December 31, 2018 Accounts Payable is paid in the first quarter of 2019. Direct labor, manufacturing overead, and selling and administrative costs are paid in the quarter incurred Income tax expense is projected at $2,000 per quarter and is paid in the quarter incurred. Gridley desires to maintain a minimum cash balance of $60,000 and borrows from the local bank as m 2 2 4,640 First Second Third Fourth Quarter Quarter Quarter Quarter Total Budgeted tires to be produced 2.300 1.900 2,100 2,300 8,600 Direct materials per tire 2 2 2 2 Direct materials needed for production 4,600 3,800 4.200 4,600 17 200 Plus: Desired direct materials in ending Inventory 760 840 920 400 400 Total direct materials needed 5,360 5,120 5.000 17,600 Less: Direct materials in beginning inventory 400 760 840 920 400 Budgeted purchases of direct materials 4.980 3,880 4,280 4.080 17 200 Direct materials cost per pound 7.00 $ 7.00 $ 7.00 7.00 $ 7.00 Budgeted cost of direct materials 34,720 $ 27,160 $ 29,960 $ 28,560 $ 120.400 Prepare the direct labor budget. (Enter any hours per unit amounts to two decimal places. XXX, and round all other amounts to the neam Roview The Aroduction kudont you prepared above. Gridley Tire Company Direct Labor Budget For the Year Ended December 31, 2019 First Socond Third Fourth Quartar Quarter Quarter Quarter Total 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 Choose from any list or enter any number in the input fields and trien click Check Answers