The Tinted Toy Company manufactures toy building block sets for children. Tinted is planning for 2019 by developing a master budget by quarters. Tinted's balance sheet for December 31, 2018, follows: E (Click the icon to view the balance sheet.) Other budget data for Tinted Toy Company: (Click the icon to view the other data) Read the requirements Requirement 1. Prepare Tinted'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. Data Table Tinted Toy Company Balance Sheet December 31, 2018 Assets Current Assets: Cash 35,000 Accounts Receivable 50,000 1,400 Raw Materials Inventory Finished Goods Inventory 11.900 Total Current Assets $ 98,300 Property, Plant, and Equipment: Equipment 194,000 Less: Accumulated Depreciation (32,000) 162,000 Total Assets $ 260,300 Liabilities Current Liabilities: Accounts Payable 12,000 Print Done Data Table $ 35,000 Cash 50,000 Accounts Receivable 1,400 Raw Materials Inventory Finished Goods Inventory 11,900 $ 98,300 Total Current Assets Property, Plant, and Equipment: Equipment Less: Accumulated Depreciation 194,000 (32,000) 162,000 $ Total Assets 260,300 Liabilities Current Liabilities: Accounts Payable 12,000 Stockholders' Equity $ 100.000 Common Stock, no par Retained Earnings Total Stockholders' Equity 148,300 248,300 Total Liabilities and Stockholders' Equity $ 260,300 Print Done i 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 1,000 sets for the first quarter and expected to increase by 100 sets per quarter. Cash sales are expected to be 30% of total sales, with the remaining 70% of sales on account. Sets are budgeted to sell for $70 per set. b. Finished Goods Inventory on December 31, 2018, consists of 350 sets at $34 each. c. Desired ending Finished Goods Inventory is 30% of the next quarter's sales; first quarter sales for 2020 are expected to be 1,400 sets. FIFO inventory costing method is used. d. Raw Materials Inventory on December 31, 2018, consists of 1,400 pounds. Direct materials requirement is 4 pounds per set. The cost is 1 per pound. e. 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 1,400 pounds; indirect materials are insignificant and not considered for budgeting purposes. f. Each set requires 0.40 hours of direct labor; direct labor costs average 14 per hour. g. Variable manufacturing overhead is $5.60 per set. h. Fixed manufacturing overhead includes $4,000 per quarter in depreciation and $5,340 per quarter for other costs, such as utilities, insurance, and property taxes. 1. Fixed selling and administrative expenses include $8,000 per quarter for salaries; $5,100 per quarter for rent: $900 per quarter for insurance; and $1,000 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 for 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, Accounts Receivable balance on December 31, 2018, is expected to be received in the first quarter of 2019. uncollectible accounts are considered insinnificant and not considered for hudantina purposes Print Done i More Info Twory wowo The rouwverwer 4 pounds per set. The cost is 1 per pound. e. 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 1,400 pounds; indirect materials are insignificant and not considered for budgeting purposes. f. Each set requires 0.40 hours of direct labor; direct labor costs average 14 per hour. g. Variable manufacturing overhead is $5.60 per set. h. Fixed manufacturing overhead includes $4,000 per quarter in depreciation and $5,340 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; $5,100 per quarter for rent: $900 per quarter for insurance; and $1,000 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 for 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: Accounts Receivable balance on December 31, 2018, is expected to be received in the first quarter of 2019; uncollectible accounts are considered insignificant and not considered for budgeting purposes. m. Direct materials purchases are paid 80% in the quarter purchased and 20% in the following quarter; Accounts Payable balance on December 31, 2018, is expected to be 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 $2,500 per quarter and is paid in the quarter incurred. p. Tinted 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 6% per year and paid at the beginning of the quarter based on the amount outstanding from the previous quarter. Print Done i Requirements 1. Prepare Tinted'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 Tinted's annual financial budget for 2019, including budgeted income statement and budgeted balance sheet. 3. Tinted sold 4,700 sets in 2019, and its actual operating income was as follows: E (Click the icon to view the actual income statement.) Prepare a flexible budget performance report through operating income for 2019. Show product costs separately from selling and administrative costs. To simplify the calculations due to sets in beginning inventory having a different cost than those produced and sold in 2019, assume the following product costs: (Click the icon to view the product costs.) 4. What was the effect on Tinted's operating income of selling 100 sets more than the static budget level of sales? 5. What is Tinted's static budget variance for operating income? 6. Explain why the flexible budget performance report provides more useful information to Tinted's managers than the static budget performance report. What insights can Tinted's managers draw from this performance report? 7. Duis 10 Tinted wonded the follandinsanat data Print Done i Requirements 6. Explain why the flexible budget performance report provides more useful information to Tinted's managers than the static budget performance report. What insights can Tinted's managers draw from this performance report? 7. During 2019, Tinted recorded the following cost data: (Click the icon to view the standard cost data.) (Click the icon to view the actual cost data.) Compute the cost and efficiency variances for direct materials and direct labor. 8. For manufacturing overhead, compute the variable overhead cost and efficiency variances and the fixed overhead cost and volume variances. 9. Prepare the standard cost income statement for 2019. 10. Calculate Tinted's ROI for 2019. To calculate average total assets, use the December 31, 2018, balance sheet for the beginning balance and the budgeted balance sheet for December 31, 2019, for the ending balance. Round all of your answers to four decimal places. 11. Calculate Tinted's profit margin ratio for 2019. Interpret your results. 12. Calculate Tinted's asset turnover ratio for 2019. Interpret your results. 13. Use the expanded ROI formula to confirm your results from Requirement 10. Interpret your results. 14. Tinted's management has specified a 20% target rate of return. Calculate Tinted's RI for 2019. Interpret your results. Print Done 0 Data Table Standard Cost Information Cost Quantity 4 pounds per set Direct materials 3 Direct labor 0.40 hours per set $1 per pound $14 per hour $14 per hour TH 0.40 hours per set Variable manufacturing overhead Fixed manufacturing overhead Static budget amount: $37,360 0.40 hours per set $20.40 per hour Print Done 7. During 2019, Tinted recorded the budo - Data Table Actual Cost Information Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead (18,400 pounds @ $1.30 per pound) $ (1,850 hours @ $14.20 per hour) (1,850 hours @ $13.70 per hour) 23,920 26,270 25,345 35,200 Print Done Tinted Toy Company Sales Budget For the Year Ended December 31, 2019 First Second Third Quarter Quarter Quarter Fourth Quarter Total Budgeted sets to be sold Sales price per unit Total sales The Tinted Toy Company manufactures toy building block sets for children. Tinted is planning for 2019 by developing a master budget by quarters. Tinted's balance sheet for December 31, 2018, follows: E (Click the icon to view the balance sheet.) Other budget data for Tinted Toy Company: (Click the icon to view the other data) Read the requirements Requirement 1. Prepare Tinted'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. Data Table Tinted Toy Company Balance Sheet December 31, 2018 Assets Current Assets: Cash 35,000 Accounts Receivable 50,000 1,400 Raw Materials Inventory Finished Goods Inventory 11.900 Total Current Assets $ 98,300 Property, Plant, and Equipment: Equipment 194,000 Less: Accumulated Depreciation (32,000) 162,000 Total Assets $ 260,300 Liabilities Current Liabilities: Accounts Payable 12,000 Print Done Data Table $ 35,000 Cash 50,000 Accounts Receivable 1,400 Raw Materials Inventory Finished Goods Inventory 11,900 $ 98,300 Total Current Assets Property, Plant, and Equipment: Equipment Less: Accumulated Depreciation 194,000 (32,000) 162,000 $ Total Assets 260,300 Liabilities Current Liabilities: Accounts Payable 12,000 Stockholders' Equity $ 100.000 Common Stock, no par Retained Earnings Total Stockholders' Equity 148,300 248,300 Total Liabilities and Stockholders' Equity $ 260,300 Print Done i 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 1,000 sets for the first quarter and expected to increase by 100 sets per quarter. Cash sales are expected to be 30% of total sales, with the remaining 70% of sales on account. Sets are budgeted to sell for $70 per set. b. Finished Goods Inventory on December 31, 2018, consists of 350 sets at $34 each. c. Desired ending Finished Goods Inventory is 30% of the next quarter's sales; first quarter sales for 2020 are expected to be 1,400 sets. FIFO inventory costing method is used. d. Raw Materials Inventory on December 31, 2018, consists of 1,400 pounds. Direct materials requirement is 4 pounds per set. The cost is 1 per pound. e. 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 1,400 pounds; indirect materials are insignificant and not considered for budgeting purposes. f. Each set requires 0.40 hours of direct labor; direct labor costs average 14 per hour. g. Variable manufacturing overhead is $5.60 per set. h. Fixed manufacturing overhead includes $4,000 per quarter in depreciation and $5,340 per quarter for other costs, such as utilities, insurance, and property taxes. 1. Fixed selling and administrative expenses include $8,000 per quarter for salaries; $5,100 per quarter for rent: $900 per quarter for insurance; and $1,000 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 for 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, Accounts Receivable balance on December 31, 2018, is expected to be received in the first quarter of 2019. uncollectible accounts are considered insinnificant and not considered for hudantina purposes Print Done i More Info Twory wowo The rouwverwer 4 pounds per set. The cost is 1 per pound. e. 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 1,400 pounds; indirect materials are insignificant and not considered for budgeting purposes. f. Each set requires 0.40 hours of direct labor; direct labor costs average 14 per hour. g. Variable manufacturing overhead is $5.60 per set. h. Fixed manufacturing overhead includes $4,000 per quarter in depreciation and $5,340 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; $5,100 per quarter for rent: $900 per quarter for insurance; and $1,000 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 for 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: Accounts Receivable balance on December 31, 2018, is expected to be received in the first quarter of 2019; uncollectible accounts are considered insignificant and not considered for budgeting purposes. m. Direct materials purchases are paid 80% in the quarter purchased and 20% in the following quarter; Accounts Payable balance on December 31, 2018, is expected to be 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 $2,500 per quarter and is paid in the quarter incurred. p. Tinted 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 6% per year and paid at the beginning of the quarter based on the amount outstanding from the previous quarter. Print Done i Requirements 1. Prepare Tinted'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 Tinted's annual financial budget for 2019, including budgeted income statement and budgeted balance sheet. 3. Tinted sold 4,700 sets in 2019, and its actual operating income was as follows: E (Click the icon to view the actual income statement.) Prepare a flexible budget performance report through operating income for 2019. Show product costs separately from selling and administrative costs. To simplify the calculations due to sets in beginning inventory having a different cost than those produced and sold in 2019, assume the following product costs: (Click the icon to view the product costs.) 4. What was the effect on Tinted's operating income of selling 100 sets more than the static budget level of sales? 5. What is Tinted's static budget variance for operating income? 6. Explain why the flexible budget performance report provides more useful information to Tinted's managers than the static budget performance report. What insights can Tinted's managers draw from this performance report? 7. Duis 10 Tinted wonded the follandinsanat data Print Done i Requirements 6. Explain why the flexible budget performance report provides more useful information to Tinted's managers than the static budget performance report. What insights can Tinted's managers draw from this performance report? 7. During 2019, Tinted recorded the following cost data: (Click the icon to view the standard cost data.) (Click the icon to view the actual cost data.) Compute the cost and efficiency variances for direct materials and direct labor. 8. For manufacturing overhead, compute the variable overhead cost and efficiency variances and the fixed overhead cost and volume variances. 9. Prepare the standard cost income statement for 2019. 10. Calculate Tinted's ROI for 2019. To calculate average total assets, use the December 31, 2018, balance sheet for the beginning balance and the budgeted balance sheet for December 31, 2019, for the ending balance. Round all of your answers to four decimal places. 11. Calculate Tinted's profit margin ratio for 2019. Interpret your results. 12. Calculate Tinted's asset turnover ratio for 2019. Interpret your results. 13. Use the expanded ROI formula to confirm your results from Requirement 10. Interpret your results. 14. Tinted's management has specified a 20% target rate of return. Calculate Tinted's RI for 2019. Interpret your results. Print Done 0 Data Table Standard Cost Information Cost Quantity 4 pounds per set Direct materials 3 Direct labor 0.40 hours per set $1 per pound $14 per hour $14 per hour TH 0.40 hours per set Variable manufacturing overhead Fixed manufacturing overhead Static budget amount: $37,360 0.40 hours per set $20.40 per hour Print Done 7. During 2019, Tinted recorded the budo - Data Table Actual Cost Information Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead (18,400 pounds @ $1.30 per pound) $ (1,850 hours @ $14.20 per hour) (1,850 hours @ $13.70 per hour) 23,920 26,270 25,345 35,200 Print Done Tinted Toy Company Sales Budget For the Year Ended December 31, 2019 First Second Third Quarter Quarter Quarter Fourth Quarter Total Budgeted sets to be sold Sales price per unit Total sales