y Background& Inputs Compan Coffee Lovers Cup Co. is your small manufacturing company. The company only produces one style of coffee cup. The cups are sold to independent distribution centers. They have seasonal sales patterns based on demand. The information below pertains to the company's budgeting process Budgeted sales in cups (units) are as follows: QTR 1 2018 QTR 2 2018 QTR 3 2018 QTR 4 2018 QTR 1 2019 QTR 2 2019 Coffee Cup 750 Units 1,600 1,950 2,500 2,100 2,150 . Each cup sells for $17.00. All sales are on account. The company's collection pattern is: 75% collected the quarter of sale; . 25% collected in the following quarter. The company desires to have finished goods inventory on hand at the end of each quarter equal . to 15% of the following quarter's budgeted sales in units. 1.75 pounds of raw material costing $3.00 per pound is required per cup produced. The company desires to have materials on hand at the end of each quarter equal to 12% of the . . following quarter's production needs. The requirement was met on December 31, 2017. 85% of the quarters, material purchases are paid for in the quarter of purchases; the remainder is paid for in the following quarter. No discount terms are available. . Each cup requires .25 hours of labor time to complete, and the hourly labor rate is $8.00/hour. . Variable manufacturing overhead is $6.00 per direct labor hour. . Fixed manufacturing overhead is $1,200 per quarter including $700 in depreciation which is not a cash outflow. . Variable selling and administrative expenses are $1.25 per cup sold. Fixed selling and administrative expense is $450 per quarter including $200 in depreciation which is not a cash outflow. . Equipment purchases and payments are scheduled as follows: $1,750 for February 2018 and $650 for August 2018