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, 2016, 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 Prepare the production budget. Review the sales budget you prepared above. Grilton Tire Company Production Budget For the Year Ended December 31, 2017 First Second Third Quarter Quarter Quarter Fourth Quarter Total 800 1,000 1,200 1,400 4,400 2,600 500 600 700 800 Budgeted tires to be sold Plus: Desired tires in ending inventory Total tires needed Less: Tires in beginning inventory Budgeted tires to be produced 1,300 1,600 2,200 7,000 1,900 600 400 500 700 2,200 900 1,100 1,300 1,500 4,800 Choose from any list or enter any number in the input fields and then click Check Answer 18 Check Answer parts remaining Clear All 4018 (4) W T! 0 gx]* Question i Data Table TI ra he For nel q! Grilton Tire Company Balance Sheet December 31, 2016 Assets P sa Current Assets: Cash. $ 24,000 20,000 6,800 11,600 Accounts Receivable Raw Materials Inventory Finished Goods Inventory Total Current Assets Property, Plant, and Equipment: Equipment Less: Accumulated Depreciation 62,400 tire sir 177,000 (55,000) 122,000 hed Total Assets $ 184,400 es Liabilities tire Current Liabilities: Anna Darka m Print Done aining 4018 W Data Table - anni mel for the Accounts Receivable Raw Materials Inventory 20,000 6,800 11,600 294 $ 62,400 Finished Goods Inventory Total Current Assets Property, Plant, and Equipment: Equipment Less: Accumulated Depreciation esa 177,000 (55,000) 122,000 $ 184,400 Total Assets Liabilities Current Liabilities: TO $ 13,000 d tire Desir Accounts Payable Stockholders' Equity Common Stock, no par $ Retained Earnings Total Stockholders' Equity 125,000 46,400 s ned Tires 171,400 d tirel $ 184,400 Total Liabilities and Stockholders' Equity from Print Done arts emainihy 4018 W i More Info (Unless otherwise noted, assume all of the following events occurred during 2016 and that any balances given are stated as of December 31, 2016.) a. Budgeted sales are 800 tires for the first quarter and expected to increase by 200 tires per quarter. Cash sales are expected to be 10% of total sales, with the remaining 90% of sales on account. b. Finished Goods Inventory on December 31 consists of 400 tires at $29 each. c. Desired ending Finished Goods Inventory is 50% of the next quarter's sales; first quarter sales for 2018 are expected be 1,600 tires. FIFO inventory costing method is used. d. Direct materials cost is $17 per tire. e. Desired ending Raw Materials Inventory is 20% of the next quarter's direct materials needed for production; desired ending inventory for December 31 is $6,800; indirect materials are insignificant and not considered for budgeting purposes. f. Each tire requires 0.20 hours of direct labor, direct labor costs average $12 per hour. g. Variable manufacturing overhead is $4 per tire. h. Fixed manufacturing overhead includes $5,000 per quarter in depreciation and $760 per quarter for other costs, such as utilities, insurance, and property taxes. i. Fixed selling and administrative expenses include $9,500 per quarter for salaries; $5,400 per quarter for rent; $1,500 per quarter for insurance; and $1,500 per quarter for depreciation. j. Variable selling and administrative expenses include supplies at 3% of sales. k. Capital expenditures include $30,000 for new manufacturing equipment, to be purchased and paid in the first quarter. 1. Cash receipts for sales on account are 70% in the quarter of the sale and 30% in the quarter following the sale; December 31, 2016, Accounts Receivable is received in the first quarter of 2017; uncollectible accounts are considered insignificant and not considered for budgeting purposes. Print Done memang 4018 W x1 More Info production, desireu enuing inventory for December 31 is $0,000; marec matenais are insigrimcari ana not considered for budgeting purposes. f. Each tire requires 0.20 hours of direct labor, direct labor costs average $12 per hour. g. Variable manufacturing overhead is $4 per tire. h. Fixed manufacturing overhead includes $5,000 per quarter in depreciation and $760 per quarter for other costs, such as utilities, insurance, and property taxes. 1. Fixed selling and administrative expenses include $9,500 per quarter for salaries; $5,400 per quarter for rent: $1,500 per quarter for insurance; and $1,500 per quarter for depreciation. J. Variable selling and administrative expenses include supplies at 3% of sales. k. Capital expenditures include $30,000 for new manufacturing equipment, to be purchased and paid in the first quarter. 1. Cash receipts for sales on account are 70% in the quarter of the sale and 30% in the quarter following the sale; December 31, 2016, Accounts Receivable is received in the first quarter of 2017; uncollectible accounts are considered insignificant and not considered for budgeting purposes. m. Direct materials purchases are paid 50% in the quarter purchased and 50% in the following quarter; December 31, 2016, Accounts Payable is paid in the first quarter of 2017. n. Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred o. Income tax expense is projected at $2,000 per quarter and is paid in the quarter incurred. p. Grilton desires to maintain a minimum cash balance of $20,000 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 8% per year and paid at the beginning of the quarter based on the amount outstanding from the previous quarter Print Done Oy 4010 W OM OX regy * Requirements ne pl se sa 1. Prepare Grilton's operating budget and cash budget for 2017 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 Grilton's annual financial budget for 2017, including budgeted income statement, budgeted balance sheet, and budgeted statement of cash flows. Tot ed tire Desir Print Done es nee