The Gridley Tire Company manufactures racing tires for bicycles. Gridley sells tires for $65 each. Gridley is planning for the next year by developing a master budget by quarters. Gridley's balance sheet for December 31, 2018, follows: (Click the icon to view the balance sheet.) Other data for Gridley Tire Company: i (Click the icon to view the other data.) Read the requirements. Requirement 1. Prepare Gridley'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 bud 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 the nearest dollar. Begin by preparing the sales budget. Gridley Tire Company Sales Budget For the Year Ended December 31, 2019 First Second Third Fourth Quarter Quarter Quarter Quarter Total Budgeted tires to be sold 1,300 1,400 1,500 1,600 5,800 $ 65 $ 65 $ 65 $ 65 || $ 65 Sales price per unit 84,500 || $ 91,000 $ 97,500 || $ 104,000 || $ 377,000 Total sales Prepare the production budget. Choose from any list or enter any number in the input fields and then click Check Answer. 1 Data Table Assets Current Assets: Cash $ 65,000 Accounts Receivable 25,000 Raw Materials Inventory 3,200 11,200 Finished Goods Inventory Total Current Assets $ 104,400 Property, Plant, and Equipment: Equipment 139,000 (50,000) Less: Accumulated Depreciation 89,000 $ 193,400 Total Assets Liabilities Current Liabilities: Accounts Payable $ 13,000 Stockholders' Equity Finished Goods Inventory 11,200 Total Current Assets $ 104,400 Property, Plant, and Equipment: Equipment 139,000 (50,000) Less: Accumulated Depreciation 89,000 $ 193,400 Total Assets Liabilities Current Liabilities: Accounts Payable $ 13,000 Stockholders' Equity Common Stock, no par $ 110,000 70,400 Retained Earnings Total Stockholders' Equity 180,400 $ 193,400 Total Liabilities and Stockholders' Equity C. e. a. Budgeted sales are 1,300 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 $28 each. Desired ending Finished Goods Inventory is 20% of the next quarter's sales; first quarter sales for 2020 are expected be 1,700 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. Direct materials requirements are 2 pounds of a rubber compound per tire. The cost of the compound is $4.00 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 $8 per hour. h. Variable manufacturing overhead is $3 per tire. i. Fixed manufacturing overhead includes $4,000 per quarter in depreciation and $23,265 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; $1,800 per quarter for rent; $1,050 per quarter for insurance; and $1,500 per quarter for depreciation. k. Variable selling and administrative expenses include supplies at 1% of sales. 1. Capital expenditures include $50,000 for new manufacturing equipment, to be purchased and paid in the first quarter. Cochronainte for coloc on annount ora 800/. in the auarter of the cola and 2001. in the nortor following the m. Cash receipts for sales on account are 80% in the quarter of the sale and 20% 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 50% in the quarter purchased and 50% in the following quarter; 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 $4,000 per quarter and is paid in the quarter incurred. q. Gridley desires to maintain a minimum cash balance of $65,000 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. X - Requirements 1. Prepare Gridley'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 Gridley's annual financial budget for 2019, including budgeted income statement and budgeted balance sheet. Print Done