The Gerard Tire Company manufactures racing tires for bicycles. Gerard sells tires Other data for Gerard Tire Company: for $90 each. Gerard is planning for the next year by developing a master budget (Click the icon to view the other data.) by quarters. Gerard's balance sheet for December 31, 2024, follows: (Click the icon to view the balance sheet) Read the requirements More info - X Data Table 91.000 Gerard Tire Company Balance Sheet December 31, 2024 Assets Current Assets Cash $ 56,000 Accounts Receivable 20,000 Raw Materials Inventory 5.100 Finished Goods Inventory 9,900 Total Current Assets $ Property, Plant, and Equipment: Equipment 194,000 Less. Accumulated Depreciation (42.000) Total Assets Liabilities Current Liabilities: Accounts Payable Stockholders' Equity Common Stock, no par $ 120.000 Retained Earnings 115 000 Total Stockholders' Equity $ Total Liabilities and Stockholders' Equity Budgeted sales are 1,500 tires for me hirst quarter and expected to increase by 200 tres per quarter. Cash sales are expected to be 10% of total sales with the remaining 90% of sales on account b. Finished Goods Inventory on December 31, 2024 consists of 300 tires at $33 each. c Desired ending Finished Goods Inventory is 30% of the next quarter's sales, first quarter sales for 2026 are expected be 2.300 tires. FIFO inventory costing method is used. d. Raw Materials Inventory on December 31, 2024, consists of 600 pounds of rubber compound used to manufacture the tires Direct materials requirements are two pounds of a rubber compound per tire. The cost of the compound is $8.50 per pound [ Desired ending Raw Materials Inventory is 40% of the next quarter's direct materials needed for production desired ending inventory for December 31, 2025 is 600 pounds, indirect materials are insignificant and not considered for budgeting purposes 9. Each tire requires 0.40 hours of direct labor direct labor costs average $12 per hour h. Variable manufacturing overhead is 54 per tire. Fixed manufacturing overhead includes $6,000 per quarter in depreciation and $16.770 per quarter for other costs, such as utilities, insurance and property taxes i Fixed selling and administrative expenses include $12,500 per quarter for salaries: 53.000 per quarter for rent: $450 per quarter for insurance, and $2,000 per quarter for depreciation k Variable seling and administrative expenses include supplies at 2% of sales. Capital expenditures include 515,000 for new manufacturing equipment, to be purchased and paid in the first quarter m. Cash receipts for sales on account are 70% in the quarter of the sale and 30% in the quarter following the sale: December 31, 2024. Accounts Receivable is received in the first quarter of 2025 uncollectible accounts are considered insignificant and not considered for budgeting purposes n. Direct materials purchases are paid 60% in the quarter purchased and 40% in the following quarter, December 31, 2024. Accounts Payable is paid in the first quarter of 2025 0. Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred p. Income tax expense is projected at 51,500 per quarter and is paid in the quarter incurred 4. Gerard desires to maintain a minimum cash balance of 555.000 and borrows from the local bankas 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 51,000 interest is 6% per year and paid at the beginning of the quarter based on the amount outstanding from the previous Quarter 152.000 243,000 8,000 235,000 243,000 Print Done Print Done Total 7,590 4 Gerard Tire Company Manufacturing Overhead Budget For the Year Ended December 31, 2025 First Second Third Fourth Quarter Quarter Quarter Quarter Budgeted tires to be produced 1.710 1,760 1,960 2,160 S VOH cost per tire 4 s 4 4 s 4 s Budgeted VOH $ 6,840 7,040 5 7,840 $ 8,640 $ Budgeted FOH Depreciation 6,000 6,000 6,000 6,000 16,770 16.770 Utilities, insurance, property taxes 16,770 16.770 Total budgeted FOH 22,770 22.770 22,770 22.770 S 29,610 $ 29,810 S Budgeted manufacturing overhead costs 30,610 $ 31,410 $ 30,360 24,000 67,080 91,080 121,440 684 704 784 864 Direct labor hours Budgeted manufacturing overhead costs Predetermined overhead allocation rate $ $ 3,036 121,440 40 Before preparing the cost of goods sold budget, calculate the projected manufacturing cost per tire for 2025. (Round all amounts to the nearest a Direct labor cost per tire 4.80 Direct materials cost per tire 17.00 Manufacturing overhead cost per tire 16.00 Total projected manufacturing cost per tire for 2025 $ 37.80 Now prepare the cost of goods sold budget Review the sales budget you prepared above. Review the production budget you prepared above Cash Receipts from Customers Total sales First Second Third Fourth Quarter Quarter Quarter Quarter Total $ 135,000 S 153,000 S 171,000 S 189,000 S 648,000 First Second Third Fourth Quarter Quarter Quarter Quarter Total Cash Receipts from Customers: Accounts Receivable balance, December 31, 2024 1st Qtr.Cash sales 1st Qtr. Credit sales, collection of Qtr. 1 sales in Qtr. 1 1st Qtr.Credit sales, collection of Otr. 1 sales in Qtr. 2 2nd Qtr.-Cash sales 2nd Qtr. Credit sales, collection of Qtr. 2 sales in Qtr. 2 2nd Qtr. Credit sales, collection of Qtr. 2 sales in Qtr. 3 3rd Qtr.-Cash sales 3rd Qtr.-- Credit sales, collection of Qtr. 3 sales in Qtr. 3 3rd Qtr. Credit sales, collection of Qtr. 3 sales in Qtr. 4 4th Qtr.-Cash sales 4th Qtr. Credit sales, collection of Qtr. 4 sales in Qtr. 4 Total cash receipts from customers $ 20,000 13,500 85,050 $ 36,450 15,300 96,390 $ 41,310 17,100 107,730 $ 46,170 18,900 119,070 $ 118,550 $ 148,140 $ 166,140 $ 184,140 $ 616,970 Accounts Receivable balance, December 31, 2025: 4th Qtr. ---Credit sales, collection of Qtr. 4 sales in Qtr. 1 of 2026 $ 51,030 Now prepare the cost of goods sold budget. Review the sales budget you prepared above. Review the production budget you prepared above. Gerard Tire Company Cost of Goods Sold Budget For the Year Ended December 31, 2025 First Second Third Fourth Quarter Quarter Quarter Quarter Beginning inventory $ 9,900 $ 45,360 $ 71,820 Tires produced and sold in 2025 64,260 $ 79,380 $ 55,260 S 64.260 S 71,820 s 79,380 $ Total budgeted cost of goods sold Total 9,900 260,820 270,720 Prepare the selling and administrative expense budget. Review the sales budget.you prepared above Gerard Tire Company Selling and Administrative Expense Budget For the Year Ended December 31, 2025 First Second Third Fourth Quarter Quarter Quarter Quarter Total Supplies Expense $ 2,700 3,060 s 3,420 $ 3.780 s 12,960 Salaries Expense 12,500 12.500 12,500 12,500 50,000 Rent Expense 3,000 3,000 3,000 3,000 12,000 Insurance Expense 450 450 450 450 1,800 Depreciation Expense 2,000 2,000 2,000 2,000 8,000 Total budgeted selling and administrative expense $ 20,650 $ 21,010 $ 21,370 S 21,730 S 84,760 Prepare the cash receipts budget. (If an input field is not used in the table leave the input field empty, do not enter a zero.) Gerard Tire Company Direct Materials Budget For the Year Ended December 31, 2025 First Second Third Fourth Quarter Quarter Quarter Quarter Total Budgeted tires to be produced 1,710 1,760 1,960 2. 160 7,590 Direct materials per tire 2 2 2 2 Direct materials needed for production 3,420 3,520 3,920 4,320 15,180 Plus: Desired direct materials in ending inventory 1,408 1,568 1,728 600 600 Total direct materials needed 4,828 5.088 5,648 4,920 15,780 Less: Direct materials in beginning inventory 600 1,408 1,568 1,728 600 Budgeted purchases of direct materials 4,228 3,680 4,080 3,192 15,180 Direct materials cost per pound S 8.50 $ 8.50 $ 8.50 $ 8.50 $ 8.50 Budgeted cost of direct materials 35,938 $ 31,280 S 34,680 5 27,132 $ 129,030 Prepare the direct labor budget. (Enter any hours per unit amounts to two decimal places, XXX, and round all other amounts to the nearest whole number.) Review the production budget you prepared above. Gerard Tire Company Direct Labor Budget For the Year Ended December 31, 2025 First Second Third Fourth Quarter Quarter Quarter Quarter Total Budgeted tires to be produced 1,710 1,760 1,960 2,160 7,590 Direct labor hours per unit 0.40 0.40 0.40 0.40 0.40 Direct labor hours needed for production 684 704 784 3,036 Direct labor cost per hour $ 12 s 12 S 12 s 12 s 12 $ 8,208 s Budgeted direct labor cost 8,448 5 9,408 s. 10,368 S 36,432 Prepare the manufacturing overhead budget. (Abbreviations used: VOH = variable manufacturing overhead; FOH = fixed manufacturing overhead.) Sales Budget For the Year Ended December 31, 2025 First Second Third Fourth Quarter Quarter Quarter Quarter Total Budgeted tires to be sold 1,500 1,700 1,900 2,100 7,200 S 90s Sales price per unit 90 S 90 $ 90 S 90 S Total sales 135,000 $ 153,000 $ 171,000 $ 189.000 s 648,000 864 Prepare the production budget. Review the sales budget you prepared above. Gerard Tire Company Production Budget For the Year Ended December 31, 2025 First Second Third Quarter Quarter Quarter Budgeted tires to be sold 1,500 1,700 1,900 Plus: Desired tires in ending inventory 510 570 630 Total tires needed 2,010 2,270 2,530 Less: Tires in beginning inventory 300 510 570 1,710 1,760 1,960 Budgeted tires to be produced Fourth Quarter Total 2,100 690 7,200 690 2.790 630 7.890 300 2,160 7,590 Review the direct materials budget you prepared above. Review the direct labor budget you prepared above. Review the manufacturing overhead budget you prepared above. Review the selling and administrative expense budget you prepared above. Cash Payments First Second Third Fourth Quarter Quarter Quarter Quarter Total Total direct materials purchases $ 35,938 $ 31,280 $ 34,680 $ 27,132 $ 129,030 First Second Third Fourth Quarter Quarter Quarter Quarter Total Cash Payments Direct Materials: Accounts Payable balance, December 31, 2024 S 8,000 1st Qtr. Qtr. 1 direct material purchases paid in Qtr. 1 21,563 1st Qtr. Qtr. 1 direct material purchases paid in Qtr. 2 $ 14,375 2nd Qtr.Qtr. 2 direct material purchases paid in Qtr. 2 18,768 2nd Qtr. Qtr. 2 direct material purchases paid in Qtr. 3 $ 12,512 3rd Qtr. Qtr. 3 direct material purchases paid in Qtr. 3 20,808 3rd Qtr. Qtr. 3 direct material purchases paid in Qtr. 4 $ 13,872 4th Qtr.Qtr. 4 direct material purchases paid in Qtr. 4 16,279 29,563 33,143 33,320 Total payments for direct materials 30,151 $ 126,177 Direct Labor: Total payments for direct labor 8,208 8,448 9,408 10,368 36,432 Manufacturing Overhead: Variable manufacturing overhead Utilities, insurance, property taxes Total payments for manufacturing overhead 6,840 16,770 23,610 7,040 16,770 23,810 7,840 16,770 24,610 8,640 16,770 25,410 30,360 67,080 97,440 Selling and Administrative Expenses: 2,700 Selling and Administrative Expenses: Supplies Expense Salaries Expense Rent Expense Insurance Expense Total payments for Selling and Admin. expenses 12,500 3,000 3,060 12,500 3,000 3,420 12,500 3,000 3,780 12,500 3,000 12,960 50,000 12,000 1,800 76,760 450 450 450 450 18,650 19,010 19,370 19,730 Income Taxes: Total payments for income taxes Capital Expenditures: Total payments for capital expenditures Total cash payments (before interest) Accounts Payable balance, December 31, 2025: 4th Qtr. Qtr. 4 direct material purchases paid in Qtr. 1 of 2026