The Tuced Toy Company manulactures toy buiding block sets for chidren. Tucd is planning for 2025 by developing a master budget by quarters. Tuco's balance theet for December 31 , 2024, followz: (Click the icon to vew the bylance sheet.) Othor budget data foe Tucei Toy Compary: (Cick the icon to view the oher data.) Rsand the Requirement 1. Prepare Tucers operasing busget and cash buspet for 2025 by quarter. Requied schedules and budgets include: sains budget, production budget, drect materiats budget, drect labor budget, are mocated bated on diect labor hours. (Round al calcalatons to the nearest dolly.) Data table (Unless otherwise noted, assume all of the following events occurred during 2024 and that any balances given are stated as of December 31,2024 .) a. Budgeted sales are 1,500 sets for the first quarter and expected to increase by 50 sets per quarter. Cash sales are expected to be 20% of total sales, with the remaining 80% of sales on account. Sets are budgeted to sell for $90 per set. b. Finished Goods Inventory on December 31,2024 , consists of 550 sets at $35 each. c. Desired ending Finished Goods Inventory is 30% of the next quarter's sales; first quarter sales for 2026 are expected to be 1,700 sets. FIFO inventory costing method is used. d. Raw Materials Inventory on December 31, 2024, consists of 3,300 pounds. Direct materials requirement is six 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 31,2025 , is 3,300 pounds; indirect materials are insignificant and not considered for budgeting purposes. f. Each set requires 0.20 hours of direct labor; direct labor costs average 10 per hour. g. Variable manufacturing overhead is $2.00 per set. h. Fixed manufacturing overhead includes $6,000 per quarter in depreciation and $6,520 per quarter for other costs, such as utilities, insurance, and property taxes. i. Fixed selling and administrative expenses include $12,000 per quarter for salaries; $4,800 per quarter for rent; $1,200 per quarter for insurance; and $2,000 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. I. Cash receipts for sales on account are 60% in the quarter of the sale and 40% in the quarter following the sale; Accounts Receivable balance on December 31, 2024, is expected to be received in the first quarter of 2025; uncollectible accounts are considered insignificant and not considered for budgeting purposes. m. Direct materials purchases are paid 70% in the quarter purchased and 30% in the following quarter; g. Variable manufacturing overhead is $2.00 per set. h. Fixed manufacturing overhead includes $6,000 per quarter in depreciation and $6,520 per quarter for other costs, such as utilities, insurance, and property taxes. i. Fixed selling and administrative expenses include $12,000 per quarter for salaries; $4,800 per quarter for rent; $1,200 per quarter for insurance; and $2,000 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 60% in the quarter of the sale and 40% in the quarter following the sale; Accounts Receivable balance on December 31,2024 , is expected to be received in the first quarter of 2025; uncollectible accounts are considered insignificant and not considered for budgeting purposes. m. Direct materials purchases are paid 70% in the quarter purchased and 30% in the following quarter; Accounts Payable balance on December 31, 2024, is expected to be paid in the first quarter of 2025. n. Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred. o. Income tax expense is projected at $3,000 per quarter and is paid in the quarter incurred. p. Tucci desires to maintain a minimum cash balance of $60,000 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 Tucci's operating budget and cash budget for 2025 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 Tucci's annual financial budget for 2025 , including budgeted income statement and budgeted balance sheet. 3. Tucci sold 7,000 sets in 2025 , and its actual operating income was as follows: Requirements Prepare a flexible budget performance report through operating income for 2025 . 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 2025, assume the following product costs: 4. What was the effect on Tucci's operating income of selling 700 sets more than the static budget level of sales? 5. What is Tucci's static budget variance for operating income? 6. Explain why the flexible budget performance report provides more useful information to Tucci's managers than the static budget performance report. What insights can Tuccl's managers draw from this performance report? 7. During 2025, Tucci recorded the following cost data below. Compute the cost and efficiency variances for direct materials and direct labor. Requirements 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 2025. 10. Calculate Tucci's ROI for 2025 . To calculate average total assets, use the December 31, 2024, balance sheet for the beginning balance and the budgeted balance sheet for December 31,2025 , for the ending balance. Round all of your answers to four decimal places. 11. Calculate Tucci's profit margin ratio for 2025 . Interpret your results. 12. Calculate Tucci's asset turnover ratio for 2025 . Interpret your results. 13. Use the expanded ROI formula to confirm your results from Requirement 10. Interpret your results. 14. Tucci's management has specified a 20% target rate of return. Calculate Tucci's RI for 2025 . Interpret your results