The Giseppe Tire Company manufactures racing tires for bicycles. Giseppe sells tires for $70 each. Giseppe is planning for the next year by developing a master budget by quarters. Giseppe's balance sheet for December 31, 2018, follows: (Click the icon to view the balance sheet.) Other data for Giseppe Tire Company: (Click the icon to view the other data.) Read the requirements. Requirement 1. Prepare Giseppe'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. Giseppe Tire Company Sales Budget For the Year Ended December 31, 2019 First Second Third Quarter Quarter Quarter Fourth Quarter Total Budgeted tires to be sold Sales price per unit Total sales Enter any number in the edit fields and then click Check Answer. parts remaining Clear All Check Answer 1. Prepare Giseppe'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. 2. Prepare Giseppe's annual financial budget for 2019, including budgeted income statement and budgeted balance sheet. Giseppe Tire Company Balance Sheet December 31, 2018 Assets Current Assets: Cash Accounts Receivable $40,000 45,000 4,800 7,500 Raw Materials Inventory Finished Goods Inventory Total Current Assets $97,300 Property, Plant, and Equipment: Equipment Less: Accumulated Depreciation Total Assets 168,000 (55,000) 113,000 $210,300 Liabilities $5,000 Current Liabilities: Accounts Payable Stockholders' Equity Common Stock, no par $125,000 Retained Earnings 80,300 Total Stockholders' Equity Total Liabilities and Stockholders' Equity 205,300 $210,300 Using the browser's print will lead to an undesirable print-out. Use the Print item from the "Question Help" menu to get a better prinless otherwise noted, assume all of the following events occurred during 2018 and that any balances given are stated as of December 31, 2018.) a. Budgeted sales are 2,000 tires for the first quarter and expected to increase by 150 tires per quarter. Cash sales are expected to be 40% of total sales, with the remaining 60% of sales on account. b. Finished Goods Inventory on December 31, 2018 consists of 300 tires at $25 each. c. Desired ending Finished Goods Inventory is 40% of the next quarter's sales, first quarter sales for 2020 are expected be 2,600 tires. FIFO inventory costing method is used. d. Raw Materials Inventory on December 31, 2018, consists of 600 pounds of rubber compound used to manufacture the tires. e. Direct materials requirements are 2 pounds of a rubber compound per tire. The cost of the compound is $8.00 per pound. f. Desired ending Raw Materials Inventory is 10% of the next quarter's direct materials needed for production, desired ending inventory for December 31, 2019 is 600 pounds, indirect materials are insignificant and not considered for budgeting purposes. g. Each tire requires 0.60 hours of direct labor, direct labor costs average $8 per hour. h. Variable manufacturing overhead is $2 per tire. i. Fixed manufacturing overhead includes $2,000 per quarter in depreciation and $33,668 per quarter for other costs, such as utilities, insurance, and property taxes. j. Fixed selling and administrative expenses include $12,000 per quarter for salaries; $4,800 per quarter for rent; $1,950 per quarter for insurance, and $500 per quarter for depreciation. k. Variable selling and administrative expenses include supplies at 2% of sales. I. Capital expenditures include $20,000 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. 2018. Accounts Receivable is received in the first quarter of 2019, uncollectible accounts are considered insignificant and not considered for budgeting purposes. n. Direct materials purchases are paid 70% in the quarter purchased and 30% in the following quarter, December 31, 2018, Accounts Payable is paid in the first quarter of 2019. 0. Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred. p. Income tax expense is projected at $3,000 per quarter and is paid in the quarter incurred. q. Giseppe desires to maintain a minimum cash balance of $35,000 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 4% per year and paid at the beginning of the quarter based on the amount outstanding from the previous quarter