Tinted Toy Company Balance Sheet December 31, 2018 Assets Current Assets: Cash Accounts Receivable Raw Materials Inventory 15,000 55,000 1,050 5,100 76,150 Finished Goods Inventory Total Current Assets Property, Plant, and Equipment: Equipment 206,000 (39,000) 167,000 Less: Accumulated Depreciation $ 243, 150 Total Assets Liabilities Current Liabilities: Accounts Payable $ 17,000 Stockholders' Equity $ Common Stock, no par Retained Earnings 130,000 96,150 226,150 Total Stockholders' Equity $ 243,150 Total Liabilities and Stockholders' Equity 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: (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. 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 (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 1,300 sets for the first quarter and expected to increase by 100 sets per quarter. Cash sales are expected to be 40% of total sales, with the remaining 60% of sales on account. Sets are budgeted to sell for $70 per set. b. Finished Goods Inventory on December 31, 2018, consists of 150 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 1,700 sets. FIFO inventory costing method is used. d. Raw Materials Inventory on December 31, 2018, consists of 1,050 pounds. Direct materials requirement is 7 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 1,050 pounds; indirect materials are insignificant and not considered for budgeting purposes. f. Each set requires 0.30 hours of direct labor; direct labor costs average $14 per hour. g. Variable manufacturing overhead is $4.20 per set. h. Fixed manufacturing overhead includes $6,500 per quarter in depreciation and $7,822 per quarter for other costs, such as utilities, insurance, and property taxes. Fixed selling and administrative expenses include $12,000 per quarter for salaries; $5,700 per quarter for rent; $1,050 per quarter for insurance; and $2,000 per quarter for depreciation. Variable selling and administrative expenses include supplies at 3% of sales. Capital expenditures include $10,000 for new manufacturing equipment, to be purchased and paid for in the first quarter. Cash receipts for sales on account are 50% in the quarter of the sale and 50% 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 90% in the quarter purchased and 10% 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 $3,000 per quarter and is paid in the quarter incurred. Tinted desires to maintain a minimum cash balance of $30,000 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. K. p