The Gessing Tire Company manufactures racing tires for bicycles. Gessing sells tires Other data for Gessing Tire Company: for $65 each. Gessing is planning for the next year by developing a master budget by click the icon to view the other data.) quarters Gessing's balance sheet for December 31, 2018, follows: Click the icon to view the balance sheet.) Read the requirements: Requirement 1. Prepare Gessing'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 manufacharing 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. Gossing Tire Company Sales Budget For the Year Ended December 31, 2019 First Second Third Fourth Quarter Quarter Quarter Quarter Budgeted tires to be sold 1,800 2,000 2,200 2.400 8.400 $ Sales price per unit 65 $ 65 $ 65 $ 65 $ 117,000 $ 130,000 $ 143,000 $ Total sales 156.000 $ 546,000 Total 65 Prepare the production budget. Prepare the production budget Review the sales budget you prepared above. Gessing Tire Company Production Budget For the Year Ended December 31, 2019 First Second Third Fourth Quarter Quarter Quarter Quarter Budgeted tires to be sold 1800 2000 2200 2400 Plus: Desired tires in ending inventory Total tires needed Less Tires in beginning inventory 700 Budgeted tires to be produced Choose from any list or enter any number in the input fields and then click Check Answer. Total 8400 700 2 3) cture - the i Data Table - X D ces Gessing Tire Company Balance Sheet December 31, 2018 Assets the irst arte Current Assets: Cash $ 50,000 32.000 117 Accounts Receivable Raw Materials Inventory Finished Goods Inventory 11.200 17,500 Total Current Assets $ 110,700 red Property. Plant, and Equipment: Equipment 155,000 (77.000) Less: Accumulated Depreciation 78,000 Total Assets 188,700 Liabilities Current Liabilities: Accounts Payable ventor $ 5,000 Stockholders' Equity 175,000 ory Common Stock, no par Retained Earnings 8,700 183.700 ny num Print Done GIG Check Ar sold pan More Info - X is el land jew (Unless otherwise noted, assume all of the following events occurred during 2018 and that any balances given are stated as of December 31, 2018.) Budgeted sales are 1,800 tires for the first quarter and expected to increase by 200 tires per quarter. Cash a. sales are expected to be 30% of total sales, with the remaining 70% of sales on account. b. Finished Goods Inventory on December 31, 2018 consists of 700 tires at $25 each. Desired ending Finished Goods Inventory is 40% of the next quarter's sales, first quarter sales for 2020 are C. expected be 2,600 tires. FIFO inventory costing method is used. Raw Materials Inventory on December 31, 2018rconsists of 1,400 pounds of rubber compound used to d. manufacture the tires. Direct materials requirements are 2 pounds of a rubber compound per tire. The cost of the compound is e. $8.00 per pound. Desired ending Raw Materials Inventory is 50% of the next quarter's direct materials needed for production; desired ending inventory for December 31, 2019 is 1,400 pounds; indirect materials are f. insignificant and not considered for budgeting purposes. get 9. Each tire requires 0.20 hours of direct labor, direct labor costs average $25 per hour. h. Variable manufacturing overhead is $4 per tire. Fixed manufacturing overhead includes $2,000 per quarter in depreciation and $8,488 per quarter for other 1. costs, such as utilities, insurance, and property taxes. Fixed selling and administrative expenses include $11,000 per quarter for salaries: $3,600 per quarter for 1. rent; $750 per quarter for insurance; and $2,000 per quarter for depreciation k. Variable selling and administrative expenses include supplies at 3% of sales. Capital expenditures include $10,000 for new manufacturing equipment, to be purchased and paid in the 1. first quarter. Cash receipts for sales on account are 60% in the quarter of the sale and 40% in the quarter following the sale; December 31, 2018, Accounts Receivable is received in the first quarter of 2019, uncollectible m. accounts are considered insignificant and not considered for budgeting purposes. inning Direct materials purchases are paid 90% in the quarter purchased and 10% in the following quarter: n. December 31, 2018, Accounts Payable is paid in the first quarter of 2019. prod o. Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred. n bu sold sin en store Print Done TOO Urdck Ani ld Desired ending Finished Goods Inventory is 40% of the next quarter's sales; first quarter sales for 2020 are C. expected be 2,600 tires. FIFO inventory costing method is used. Raw Materials Inventory on December 31, 2018, consists of 1,400 pounds of rubber compound used to d. manufacture the tires. Direct materials requirements are 2 pounds of a rubber compound per tire. The cost of the compound is e. $8.00 per pound. Desired ending Raw Materials Inventory is 50% of the next quarter's direct materials needed for production; desired ending inventory for December 31, 2019 is 1,400 pounds; indirect materials are f. insignificant and not considered for budgeting purposes 9. Each tire requires 0.20 hours of direct labor, direct labor costs average $25 per hour. h. Variable manufacturing overhead is $4 per tire. Fixed manufacturing overhead includes $2,000 per quarter in depreciation and $8,488 per quarter for other bu costs, such as utilities, insurance, and property taxes. Fixed selling and administrative expenses include $11,000 per quarter for salaries: $3,600 per quarter for 1. rent; $750 per quarter for insurance; and $2,000 per quarter for depreciation k. Variable selling and administrative expenses include supplies at 3% of sales. Capital expenditures include $10,000 for new manufacturing equipment, to be purchased and paid in the 1. first quarter. Cash receipts for sales on account are 60% in the quarter of the sale and 40% in the quarter following the sale: December 31, 2018, Accounts Receivable is received in the first quarter of 2019; uncollectible m. accounts are considered insignificant and not considered for budgeting purposes. Direct materials purchases are paid 90% in the quarter purchased and 10% in the following quarter: n. December 31, 2018, Accounts Payable is paid in the first quarter of 2019. o. Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred. p. Income tax expense is projected at $2,000 per quarter and is paid in the quarter incurred. Gessing desires to maintain a minimum cash balance of $50,000 and borrows from the local bank as ning 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 5% per 4. year and paid at the beginning of the quarter based on the amount outstanding from the previous quarter. sold in en orod or Print Done