The Grilton Tire Company manufactures racing tires for bicycles. Grilton sells tires for $80 each. Grilton is planning for next year by developing a master budget by quarters. Griltons balance sheet for December 31, 2018 follows:

GRILTON TIRE COMPANY

Balance Sheet

December 31, 2018

Assets

Current Assets:

Cash $ 67,000

Accounts Receivable 25,000

Raw Materials Inventory 7,500

Finished Goods Inventory 12,000

Total Current Assets $ 111,500

Property, Plant and Equipment:

Equipment 206,000

Less: Accumulated Depreciation (106,000) 100,000

Total Assets $211,500

Liabilities

Current Liabilities:

Accounts Payable $ 14,000

Stockholders Equity

Common Stock, no par $ 140,000

Retained Earnings 57,500

Total Stockholders Equity 197,500

Total Liabilities and Stockholders Equity $211,500

Other data for Grilton Tire Company:

a. Budgeted Sales are 1,500 for the first quarter and expected to increase by 200 tires per quarter. Cash 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 300 tires at $29 each.

c. Desired ending Finished Goods Inventory is 40% of the next quarters sales; first quarter sales for 2018 are expected to be 2,300 tires and second quarter sales for 2018 are expected to be 2,500. FIFO inventory costing method is used.

d. Direct Materials cost is $8 per tire.

e. Desired ending Raw Materials Inventory is 30% of the next quarters direct materials needed for production.

f. Each tire requires 0.40 hours of direct labor; direct labor costs average $16 per hour.

g. Variable manufacturing overhead is $2 per tire produced.

h. Fixed manufacturing overhead includes $4,500 per quarter in depreciation and $26,780 per quarter for other costs, such as utilities, insurance, and property taxes.

i. Fixed selling and administrative expenses include $8,000 per quarter for salaries; $1,800 per quarter for rent; $1,200 per quarter for insurance; and $500 per quarter for depreciation.

j. Variable selling and administrative expenses include supplies at 2% of sales.

k. Capital expenditures include $45,000 for new manufacturing equipment, to be purchased and paid in the first quarter.

l. Cash receipts for sales on account are 60% in the quarter of sale and 40% in the quarter following the sale; December 31, 2018, Accounts Receivable is received in the first quarter of 2019.

m. 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.

n. Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred.

o. Income tax expense is projected at $3,500 per quarter and is paid in the quarter incurred.

p. Grilton 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 6% per year and paid at the beginning of the quarter based on the amount outstanding from the previous quarter.

REQUIREMENTS:

1. Prepare a sales budget in units and dollars for each quarter and in total for the year 2019. (5 pts.)

2. Prepare a schedule of expected cash collections for each quarter and in total for the year 2019. (5 pts.)

3. Prepare a production budget for each quarter and in total for the year 2019. (5 pts.)

4. Prepare a direct materials budget for each quarter and in total for the year 2019. (5 pts.)

P22-41A (similar to) 8 Question Help The Grilton Tire Company manufactures racing tires for bicycles. Grilton sells tires for $80 each. Grilton is planning for the next year by developing a master budget by quarters. Grilton's balance sheet for December 31, 2018, follows: (Click the icon to view the balance sheet.) Other data for Grilton Tire Company: (Click the icon to view the other data.) Read the requirements. Requirement 1. Prepare Grilton'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. Grilton 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 P22-41A (similar to) 8 Question Help The Grilton Tire Company manufactures racing tires for bicycles. Grilton sells tires for $80 each. Grilton is planning for the next year by developing a master budget by quarters. Grilton's balance sheet for December 31, 2018, follows: (Click the icon to view the balance sheet.) Other data for Grilton Tire Company: (Click the icon to view the other data.) Read the requirements. Requirement 1. Prepare Grilton'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. Grilton 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