The Gerard Tire Company manufactures racing tires for bicycles. Gerard sells tires for \\( \\$ 90 \\) each. Gerard is planning for the next year by developing a master budget by quarters. Gerard's balance sheet for December 31, 2024, follows: (Cick the icon to view the balance sheet) Other data for Genard Tire Company: (Click the icon to view the cther data.) Read the Requirement 1. Prepare Gerard's operasing budget and cash budget for 2025 by quaree. Required schedules and budgets include: sales budget, production budget, dinect matorials budget dircet labor budget, manufacturing overhead budget, cost of goods sold budget, selling and administrative expecse budget, schedule of cash receipts, schedule of cash payments, and cash budget. Manulacturing overhead costs are allocaled based on direct labor hours, Round all calculations to the nearest doliar, Begin by preparing the sales budget. Pregare the production budjet. Berien the saint butam rou seneaced above. Requirements 1. Prepare Gerard's operating budget and cash budget for 2025 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. 2. Prepare Gerard's annual financial budget for 2025 , including budgeted income statement and budgeted balance sheet. (Unless otherwise noted, assume all of the following events occurred during 2024 and that any balances given are stated as of December 31, 2024.) a. Budgeted sales are 1,500 tires for the first quarter and expected to increase by 200 tires 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. e. Direct materials requirements are two pounds of a rubber compound per tire. The cost of the compound is \\( \\$ 8.50 \\) per pound. f. 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. g. Each tire requires 0.40 hours of direct labor; direct labor costs average \\( \\$ 12 \\) per hour. h. Variable manufacturing overhead is \\( \\$ 4 \\) per tire. i. 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. j. Fixed selling and administrative expenses include \\( \\$ 12,500 \\) per quarter for salaries; \\( \\$ 3,000 \\) per quarter for rent; \\( \\$ 450 \\) per quarter for insurance; and \\( \\$ 2,000 \\) per quarter for depreciation. k. Variable selling and administrative expenses include supplies at \2 of sales. l. Capital expenditures include \\( \\$ 15,000 \\) for new manufacturing equipment, to be purchased and paid in the first quarter. \\( \\mathrm{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; Gerard Tire Company Production Budget For the Year Ended December 31, 2025 Prepare the direct materials budget. Review the production budget you prepared above. Review the production budget you prepared above. Data table f. 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. g. Each tire requires 0.40 hours of direct labor, direct labor costs average \\( \\$ 12 \\) per hour. h. Variable manufacturing overhead is \\( \\$ 4 \\) per tire. i. 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. j. Fixed selling and administrative expenses include \\( \\$ 12,500 \\) per quarter for salaries; \\( \\$ 3,000 \\) per quarter for rent; \\( \\$ 450 \\) per quarter for insurance; and \\( \\$ 2,000 \\) per quarter for depreciation. k. Variable selling and administrative expenses include supplies at \2 of sales. 1. Capital expenditures include \\( \\$ 15,000 \\) for new manufacturing equipment, to be purchased and praid 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. o. Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred. p. Income tax expense is projected at \\( \\$ 1,500 \\) per quarter and is paid in the quarter incurred. q. Gerard desires to maintain a minimum cash balance of \\( \\$ 55,000 \\) 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 \6 per year and paid at the beginning of the quarter based on the amount outstanding from the previous quarter