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In: Accounting
Only need what is in bold. Thank you. The Gessing Tire Company manufactures racing tires for...
Only need what is in bold. Thank you.
The Gessing Tire Company manufactures racing tires for bicycles. Gessing sells tires for $85 each. Gessing is planning for the next year by developing a master budget by quarters. Gessing’s balance sheet for December 31, 2018, follows:
Gessing Tire Company
Balance sheet
December 31, 2018
Current Assets:
Cash $ 52,000
Accounts Receivable 35,000
Raw Materials Inventory 1,900
Finished Goods Inventory 2,400
________
Total Current Assets $ 91,300
Property, Plant, and Equipment:
Equipment 142,000
Less: Accumulated Depreciation (50,000) 92,000
_________ ________
Total Assets $ 183,300
==============
Liabilities
Current Liabilities:
Accounts Payable $10,000
Stockholder’s Equity
Common Stock, no par $ 110,000
Retained Earnings 63,300
_________
Total Stockholders’ Equity 173,300
_______
Total Liabilities and Stockholder’s Equity $ 183,300
========
Other data for Gessing Tire Company: A. Budgeted sales are 1,000 tires for the first quarter and expected to increase by 100 tires per quarter. Cash sales are expected to be 20% of total sales, with the remaining 80% of sales on account.
B. Finished Goods Inventory on December 31, 2018 consists of 100 tires at $24 each.
C. Desired ending Finished Goods Inventory is 50% of the next quarter's sales; first quarter sales for 2020 are expected be 1,400 tires. FIFO inventory costing method is used.
D. Raw Materials Inventory on December 31, 2018, consists of 200 pounds of rubber compound used to manufacture the tires.
E. Direct materials requirements are 2 pounds of a rubber compound per tire. The cost of the compound is $9.50 per pound.
F. 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 200 pounds; indirect materials are insignificant and not considered for budgeting purposes.
G. Each tire requires 0.60 hours of direct labor; direct labor costs average $16 per hour.
H. Variable manufacturing overhead is $2 per tire.
I. Fixed manufacturing overhead includes $3,500 per quarter in depreciation and $28,220 per quarter for other costs, such as utilities, insurance, and property taxes.
- Fixed selling and administrative expenses include $8,000 per quarter for salaries; $5,700 per quarter for rent; $1,650 per quarter for insurance; and $1,000 per quarter for depreciation.
- Variable selling and administrative expenses include supplies at 1% of sales
- Capital expenditures include $35,000 for new manufacturing equipment, to be purchased and paid in the first quarter.
- Cash receipts for sales on account are 80% in the quarter of sale and 20% in the quarter following the sale; December 31, 2018, Accounts receivable is received in the first quarter of 2019, uncollectible accounts are considered insignificant not considered for budgeting purposes.
- Direct materials purchases are paid 80% in the quarter of the sale and 20% in the following quarter; December 31, 2018, Accounts payable is paid in the first quarter of 2019.
- Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred.
- Income tax expense is projected at $3,000 per quarter and is paid in the quarter incurred.
- Gessing desires to maintain a minimum cash balance of $50,000 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.
Read the requirments: 1. Prepare Gessing'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 Gessing's annual financial budget for 2019, including budgeted income statement and budgeted balance sheet.
(I need what's in bold please)
Before preparing the cost of goods sold budget, calculate the projected manufacturing cost per tire for 2019. Round all amounts to the nearest cent.
Direct materials cost per tire $
Direct labor cost per tire
Manufacturing overhead cost per tire
Total projected manufacturing cost per tire for 2019
Cost of goods sold budget
For the year ended december 31, 2019
1st quarter | 2nd quarter | 3rd quarter| 4th quarter | total
Beginning inventory
Tires produced and sold in 2019
Total budgeted cost of goods sold
Prepare the selling and administrative expense budget:
Selling and administrative budget
For the year ended december 31, 2019
1st quarter | 2nd quarter | 3rd quarter | 4th quarter | Total
Salaries expense
Rent expense
Insurance expense
Depreciation expense
Supplies expense
Total budgeted selling and administrative expense
Prepare cash receipts budget:
1st quarter | 2nd quarter | 3rd quarter | 4th quarter | total
Total sales
1st quarter | 2nd quarter | 3rd quarter | 4th quarter | total
Cash receipts from customers
Accounts receivable balance,
December 31,2018
1st qtr.- cash sales
1st qtr.- credit sales, collection
Of qtr. 1 sales in qtr. 1
2nd qtr.- cash sales
2nd qtr.- credit sales, collection
Of qtr. 2 sales in qtr. 2
2nd qtr.- credit sales, collection
of qtr. 2 sales in qtr. 3
3rd qtr.- cash sales
3rd qtr.-credit sales, collection
of qtr. 3 sales in qtr. 3
3rd qtr.- credit sales, collection
Of qtr. 3 sales in qtr. 4
4th qtr.-cash sales
4th qtr.- credit sales collection
Of qtr. 4 sales in qtr. 4
Total cash receipts from customers
Solutions
Expert Solution
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The requirements in bold need some additional workings schedules to be attached so I am attaching sales, and production budget too.
Due to character limit I am attaching the image of " Cash receipts Budget".
| Gessing Tire Company | ||
| Direct Material cost per tire | Amount $ | Note |
| Material required per unit | 2.00 | AL |
| Cost per pound | 9.50 | AM |
| Direct Material cost per tire | 19.00 | AN=AL*AM |
| Direct labor cost per tire | Amount $ | |
| Labor Hour required per unit | 0.60 | AO |
| Cost per Hour | 16.00 | AP |
| Direct labor cost per tire | 9.60 | AQ=AO*AP |
| Workings for Manufacturing overhead | |||||||
| Production Budget | Qtr. 1 | Qtr. 2 | Qtr. 3 | Qtr. 4 | Total | Qtr. 1 | Note |
| Budgeted sales (Units) | 1,000.00 | 1,100.00 | 1,200.00 | 1,300.00 | 4,600.00 | 1,400.00 | A |
| Add: Closing | 550.00 | 600.00 | 650.00 | 700.00 | 700.00 | F=50% of A of next month. | |
| Less: Opening | 100.00 | 550.00 | 600.00 | 650.00 | 100.00 | G=50% of A of same month. For Quarter 1 its given in the problem. | |
| Production Budget | 1,450.00 | 1,150.00 | 1,250.00 | 1,350.00 | 5,200.00 | H |
| Fixed manufacturing overhead | Qtr. 1 | Qtr. 2 | Qtr. 3 | Qtr. 4 | Total | Note |
| Depreciation | 3,500.00 | 3,500.00 | 3,500.00 | 3,500.00 | 14,000.00 | |
| Utilities, insurance, property taxes | 28,220.00 | 28,220.00 | 28,220.00 | 28,220.00 | 112,880.00 | |
| Fixed manufacturing overhead | 31,720.00 | 31,720.00 | 31,720.00 | 31,720.00 | 126,880.00 | AR |
| Manufacturing overhead cost per tire | Amount $ | Note |
| Total Fixed manufacturing overhead for 2019 | 126,880.00 | See AR |
| Production Budget for 2019 | 5,200.00 | See H |
| Fixed manufacturing overhead cost per tire | 24.40 | AS= AR/H |
| Add: Variable manufacturing overhead per tire | 2.00 | |
| Manufacturing overhead cost per tire | 26.40 | AT |
| Total projected manufacturing cost per tire for 2019 | Amount $ | Note |
| Direct Material cost per tire | 19.00 | See AN |
| Direct labor cost per tire | 9.60 | See AQ |
| Manufacturing overhead cost per tire | 26.40 | See AT |
| Total projected manufacturing cost per tire for 2019 | 55.00 | AU |
| Workings for cost of goods sold | Amount $ | |
| Budgeted sales (Units) for 2019 | 4,600.00 | See A |
| Less: Opening Finished goods inventory | 100.00 | |
| Units produced and sold in 2019 | 4,500.00 | AV |
| Total projected manufacturing cost per tire for 2019 | 55.00 | See AU |
| Cost of units produced and sold in 2019 | 247,500.00 | AW=AU*AV |
| Add: Finished goods inventory, opening | 2,400.00 | |
| Cost of goods sold | 249,900.00 | |
| Workings for selling & admin expenses | ||||||
| Sales Budget | Qtr. 1 | Qtr. 2 | Qtr. 3 | Qtr. 4 | Total | Note |
| Budgeted sales (Units) | 1,000.00 | 1,100.00 | 1,200.00 | 1,300.00 | 4,600.00 | A |
| Sell price | 85.00 | 85.00 | 85.00 | 85.00 | B | |
| Budgeted sales ($) | 85,000.00 | 93,500.00 | 102,000.00 | 110,500.00 | 391,000.00 | C=A*B |
| Cash Sales at 20% | 17,000.00 | 18,700.00 | 20,400.00 | 22,100.00 | 78,200.00 | D=C*20% |
| Credit Sales at 80% | 68,000.00 | 74,800.00 | 81,600.00 | 88,400.00 | 312,800.00 | E=C*80% |
| Selling & admin expenses Budget | ||||||
| Variable Selling & admin expenses Budget | Qtr. 1 | Qtr. 2 | Qtr. 3 | Qtr. 4 |
 ekkarill92 answered 2 years agoRelated SolutionsThe Grilton Tire Company manufactures racing tires for bicycles. Grilton sells tires for $50 each. Grilton...The Grilton Tire Company manufactures racing tires for bicycles.
Grilton sells tires for $50 each. Grilton is planning for next year
(2020) by developing a master budget by quarters. Grilton’s balance
sheet for December 31, 2019 follows:
GRILTON TIRE COMPANY
Balance Sheet
December 31, 2019
Assets
Current Assets:
Cash $ 39,000
Accounts
Receivable 40,000
Raw Materials
Inventory 2,400
Finished Goods
Inventory 8,700
Total Current
Assets $
90,100
Property, Plant and Equipment:
Equipment 177,000
Less: Accumulated
Depreciation (42,000) 135,000
Total
Assets $225,100
Liabilities
Current Liabilities:
Accounts
Payable $ 8,000
Stockholder’s Equity
Common Stock,...
The Gessing Tire Company manufactures racing tires for bicycles. Gessing sells tires for $85 each. Gessing...The Gessing Tire Company manufactures racing tires for bicycles.
Gessing sells tires for $85 each. Gessing is planning for the next
year by developing a master budget by quarters. Gessing’s balance
sheet for December 31, 2018, follows:
Gessing Tire Company| Balance sheet |December 31, 2018
Current Assets:
Cash
$
52,000
Accounts Receivable
35,000
Raw Materials Inventory 1,900
Finished Goods Inventory 2,400
________
Total Current Assets
$
91,300
Property, Plant, and Equipment:
Equipment
142,000
Less: Accumulated Depreciation (50,000)
92,000
_________
________...
The Gessing Tire Company manufactures racing tires for bicycles. Gessing sells tires for $85 each. Gessing...
The
Gessing Tire Company manufactures racing tires for bicycles.
Gessing sells tires for $85 each. Gessing is planning for the next
year by developing a master budget by quarters. Gessing’s balance
sheet for December 31, 2018, follows:
Gessing Tire Company
Balance sheet
December 31, 2018
Current
Assets:
Cash
$
52,000
Accounts Receivable
35,000
Raw Materials Inventory 1,900
Finished Goods Inventory 2,400
________
Total Current Assets
$
91,300
Property, Plant, and Equipment:
Equipment
142,000
Less: Accumulated Depreciation (50,000)
92,000
_________
________...
The Grilton Tire Company manufactures racing tires for bicycles. Grilton sells tires for $50 each. Grilton...The Grilton Tire Company manufactures racing tires for bicycles.
Grilton sells tires for $50 each. Grilton is planning for next year
by developing a master budget by quarters. Grilton’s balance sheet
for December 31, 2016 follows:
GRILTON TIRE COMPANY
Balance Sheet
December 31, 2016
Assets
Current Assets:
Cash
$
39,000
Accounts
Receivable
40,000
Raw Materials
Inventory
2,400
Finished Goods
Inventory
8,700
Total Current
Assets
$
90,100
Property, Plant and Equipment:
Equipment
177,000
Less:...
The Grilton Tire Company manufactures racing tires for bicycles. Grilton sells tires for $50 each. Grilton...The Grilton Tire Company manufactures racing tires for bicycles.
Grilton sells tires for $50 each. Grilton is planning for next year
by developing a master budget by quarters. Grilton’s balance sheet
for December 31, 2017 follows:
GRILTON TIRE COMPANY
Balance Sheet
December 31, 2017
Assets
Current Assets:
Cash
$
39,000
Accounts
Receivable
40,000
Raw Materials
Inventory
2,400
Finished Goods
Inventory
8,700
Total Current
Assets
$ 90,100
Property, Plant and Equipment:
Equipment
177,000
Less:...
The Grilton Tire Company manufactures racing tires for bicycles. Grilton sells tires for $50 each. Grilton...The Grilton Tire Company manufactures racing tires for bicycles.
Grilton sells tires for $50 each. Grilton is planning for next year
by developing a master budget by quarters. Grilton’s balance sheet
for December 31, 2016 follows:
GRILTON TIRE COMPANY
Balance Sheet
December 31, 2016
Assets
Current Assets:
Cash
$
39,000
Accounts
Receivable
40,000
Raw Materials
Inventory
2,400
Finished Goods
Inventory
8,700
Total Current
Assets
$
90,100
Property, Plant and Equipment:
Equipment
177,000
Less:...
The Grilton Tire Company manufactures racing tires for bicycles. Grilton sells tires for $50 each. Grilton...
The Grilton Tire Company manufactures racing tires for bicycles.
Grilton sells tires for $50 each. Grilton is planning for next year
by developing a master budget by quarters. Grilton’s balance sheet
for December 31, 2016 follows:
GRILTON TIRE COMPANY
Balance Sheet
December 31, 2016
Assets
Current Assets:
Cash $ 39,000
Accounts
Receivable 40,000
Raw Materials
Inventory 2,400
Finished Goods
Inventory 8,700
Total Current
Assets $ 90,100
Property, Plant and Equipment:
Equipment 177,000
Less: Accumulated
Depreciation (42,000) 135,000
Total
Assets $225,100
Liabilities
Current Liabilities:
Accounts
Payable $ 8,000
Stockholder’s Equity
Common Stock, no
par $...
The Grilton Tire Company manufactures racing tires for bicycles. Grilton sells tires for $50 each. Grilton...The Grilton Tire Company manufactures racing tires for bicycles.
Grilton sells tires for $50 each. Grilton is planning for next year
by developing a master budget by quarters. Grilton’s balance sheet
for December 31, 2017 follows:
GRILTON TIRE COMPANY
Balance Sheet
December 31, 2017
Assets
Current Assets:
Cash
$
39,000
Accounts
Receivable
40,000
Raw Materials
Inventory
2,400
Finished Goods
Inventory
8,700
Total Current
Assets
$ 90,100
Property, Plant and Equipment:
Equipment
177,000
Less:...
The Grilton Tire Company manufactures racing tires for bicycles. Grilton sells tires for $50 each. Grilton...
The Grilton Tire Company manufactures racing tires for
bicycles. Grilton sells tires for $50 each. Grilton is planning for
next year by developing a master budget by quarters. Grilton’s
balance sheet for December 31, 2016 follows:
GRILTON TIRE COMPANY
Balance Sheet
December 31, 2016
Assets
Current Assets:
Cash $ 39,000
Accounts Receivable 40,000
Raw Materials Inventory 2,400
Finished Goods Inventory 8,700
Total Current Assets $ 90,100
Property, Plant and Equipment:
Equipment 177,000
Less: Accumulated Depreciation (42,000) 135,000
Total Assets $225,100...
The Grilton Tire Company manufactures racing tires for bicycles. Grilton sells tires for $50 each. Grilton...The Grilton Tire Company manufactures racing tires for bicycles.
Grilton sells tires for $50 each. Grilton is planning for next year
by developing a master budget by quarters. Grifton’s balance sheet
for December 31, 2016 follows:
GRILTON TIRE COMPANY
Balance Sheet
December 31, 2016
Assets
Current Assets:
Cash $ 39,000
Accounts
Receivable 40,000
Raw Materials
Inventory 2,400
Finished Goods
Inventory 8,700
Total Current
Assets $ 90,100
Property, Plant and Equipment:
Equipment 177,000
Less: Accumulated
Depreciation (42,000) 135,000
Total
Assets $225,100
Liabilities
Current Liabilities:
Accounts
Payable $ 8,000
Stockholder’s Equity
Common Stock, no
par $...
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