The results of operations for the Richetti Manufacturing Company for the fourth quarter of 2020 were as follows: Sales $ 682,000 Less variable cost of sales 418,000 Contribution margin 264,000 Less fixed production costs $ 140,000 Less fixed selling and administrative expenses 66,000 206,000 Income before taxes 58,000 Less taxes on income 23,200 Net income $ 34,800 Note: Richetti Manufacturing uses the variable costing method. Thus, only variable production costs are included in inventory and cost of goods sold. Fixed production costs are charged to expense in the period incurred. The companys balance sheet as of the end of the fourth quarter of 2020 was as follows: Assets: Cash $ 194,000 Accounts receivable 264,000 Inventory 484,000 Total current assets 942,000 Property, plant, and equipment 550,000 Less accumulated depreciation 132,000 Total assets $ 1,360,000 Liabilities and owners equity: Accounts payable $ 74,800 Common stock 674,000 Retained earnings 611,200 Total liabilities and owners equity $ 1,360,000 Additional information: 1. Sales and variable costs of sales are expected to increase by 12 percent in the next quarter. 2. All sales are on credit with 60 percent collected in the quarter of sale and 40 percent collected in the following quarter. 3. Variable cost of sales consists of 40 percent materials, 40 percent direct labor, and 20 percent variable overhead. Materials are purchased on credit. Fifty percent are paid for in the quarter of purchase, and the remaining amount is paid for in the quarter after purchase. The inventory balance is not expected to change. Also, direct labor and variable overhead costs are paid in the quarter the expenses are incurred. 4. Fixed production costs (other than $10,000 of depreciation expense) are expected to increase by three percent. Fixed production costs requiring payment are paid in the quarter they are incurred. 5. Fixed selling and administrative costs (other than $8,000 of depreciation expense) are expected to increase by two percent. Fixed selling and administrative costs requiring payment are paid in the quarter they are incurred. 6. The tax rate is expected to be 20 percent. All taxes are paid in the quarter they are incurred. 7. No purchases of property, plant, or equipment are expected in the first quarter of 2021. (a) Correct answer icon Your answer is correct. Prepare a budgeted income statement for the first quarter of 2021. Richetti Manufacturing Company Budgeted Income Statement choose the accounting period For the Quarter Ended March 31, 2021 select an income statement item Sales $enter a dollar amount 763840 select between addition and deduction Less : select an income statement item Variable cost of sales enter a dollar amount 468160 select a summarizing line for the first part Contribution margin enter a total amount for the first part 295680 select between addition and deduction Less : select an income statement item Fixed production costs $enter a dollar amount 143900 select an income statement item Fixed selling and administrative expenses enter a dollar amount 67160 enter a subtotal of the two previous amounts 211060 select a summarizing line for the second part Income before taxes enter a total amount for all two parts 84620 select between addition and deduction Less : select an income statement item Taxes on income enter a dollar amount 16924 select a closing name for this statement Net income/(loss) $enter a total net income or loss amount 67696 eTextbook and Media List of Accounts Attempts: 1 of 3 used (b) Prepare a cash budget for the first quarter of 2021. Richetti Manufacturing Company Cash Budget choose the accounting period For the Quarter Ended March 31, 2021 select an opening name for section one Cash receipts : select a cash budget item Cash collected from sales $enter a dollar amount 468160 select an opening name for section two Cash payments : select a cash budget item Payment for labor $enter a dollar amount select a cash budget item Payment for fixed production costs enter a dollar amount select a cash budget item Payment for fixed selling and admistration expense enter a dollar amount select a cash budget item Payment of income taxes enter a dollar amount select a cash budget item Payment for variable overhead enter a dollar amount select a cash budget item Payment of material enter a dollar amount select a closing name for section two Total cash payments enter a total amount for section two select a summarizing line for the first part Excess/(deficiency) of receipts over disbursements $enter a total amount for the first part select between addition and deduction Add : select a cash budget item Beginning cash balance enter a dollar amount Select a closing cash budget item Ending cash balance $enter a total amount for the cash budget