The Giseppe Tire Company manufactures racing tires for bicycles. sells tires for $80 each. Giseppe is planning for the next year by developing a master budget by quarters. balance sheet for follows

Requirements:

1.Prepare Giseppe'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.

 

More Info (Unless 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 1,400 tires for the first quarter and expected to increase by 100 tires per quarter. Cash sales are expected to be 20% of total sales, with the remaining 80% of sales on account. b. Finished Goods Inventory on December 31, 2018 consists of 400 tires at $35 each. c. Desired ending Finished Goods Inventory is 30% of the next quarter's sales; first quarter sales for 2020 are expected be 1,800 tires. FIFO inventory costing method is used. d. Raw Materials Inventory on December 31, 2018, consists of 800 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 $5.00 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 800 pounds; indirect materials are insignificant and not considered for budgeting purposes. g. Each tire requires 0.50 hours of direct labor; direct labor costs average $10 per hour. h. Variable manufacturing overhead is $5 per tire. i. Fixed manufacturing overhead includes $3,500 per quarter in depreciation and $12,350 per quarter for other costs, such as utilities, insurance, and property taxes. j. Fixed selling and administrative expenses include $7,500 per quarter for salaries; $3,000 per quarter for rent; $1,500 per quarter for insurance; and $2,000 per quarter for depreciation. k. Variable selling and administrative expenses include supplies at 1% of sales. I. Capital expenditures include $10,000 for new manufacturing equipment, to be purchased and paid in the first quarter.