Question

I ONLY need parts 5-8 answered please. Thank you!

Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for 2019 and reports a balance sheet at December 31, 2018 as follows:

Endless Mountain Company
Balance Sheet
December 31, 2018
Assets
Current assets:
Cash	$	46,200
Accounts receivable (net)		260,000
Raw materials inventory (4,500 yards)		11,250
Finished goods inventory (1,500 units)		32,250
Total current assets				$	349,700
Plant and equipment:
Buildings and equipment		900,000
Accumulated depreciation		(292,000	)
Plant and equipment, net					608,000
Total assets				$	957,700
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable				$	158,000
Stockholders’ equity:
Common stock	$	419,800
Retained earnings		379,900
Total stockholders’ equity					799,700
Total liabilities and stockholders’ equity				$	957,700

The company’s chief financial officer (CFO), in consultation with various managers across the organization has developed the following set of assumptions to help create the 2019 budget:

1. The budgeted unit sales are 12,000 units, 37,000 units, 15,000 units, and 25,000 units for quarters 1-4, respectively. Notice that the company experiences peak sales in the second and fourth quarters. The budgeted selling price for the year is $32 per unit. The budgeted unit sales for the first quarter of 2020 is 13,000 units.
2. All sales are on credit. Uncollectible accounts are negligible and can be ignored. Seventy-five percent of all credit sales are collected in the quarter of the sale and 25% are collected in the subsequent quarter.
3. Each quarter’s ending finished goods inventory should equal 15% of the next quarter’s unit sales.
4. Each unit of finished goods requires 3.5 yards of raw material that costs $3.00 per yard. Each quarter’s ending raw materials inventory should equal 10% of the next quarter’s production needs. The estimated ending raw materials inventory on December 31, 2019 is 5,000 yards.
5. Seventy percent of each quarter’s purchases are paid for in the quarter of purchase. The remaining 30% of each quarter’s purchases are paid in the following quarter.
6. Direct laborers are paid $18 an hour and each unit of finished goods requires 0.25 direct labor-hours to complete. All direct labor costs are paid in the quarter incurred.
7. The budgeted variable manufacturing overhead per direct labor-hour is $3.00. The quarterly fixed manufacturing overhead is $150,000 including $20,000 of depreciation on equipment. The number of direct labor-hours is used as the allocation base for the budgeted plantwide overhead rate. All overhead costs (excluding depreciation) are paid in the quarter incurred.
8. The budgeted variable selling and administrative expense is $1.25 per unit sold. The fixed selling and administrative expenses per quarter include advertising ($25,000), executive salaries ($64,000), insurance ($12,000), property tax ($8,000), and depreciation expense ($8,000). All selling and administrative expenses (excluding depreciation) are paid in the quarter incurred.
9. The company plans to maintain a minimum cash balance at the end of each quarter of $30,000. Assume that any borrowings take place on the first day of the quarter. To the extent possible, the company will repay principal and interest on any borrowings on the last day of the fourth quarter. The company’s lender imposes a simple interest rate of 3% per quarter on any borrowings.
10. Dividends of $15,000 will be declared and paid in each quarter.
11. The company uses a last-in, first-out (LIFO) inventory flow assumption. This means that the most recently purchased raw materials are the “first-out” to production and the most recently completed finished goods are the “first-out” to customers.

Required:

The company’s CFO has asked you to prepare the 2019 master budget. To fulfill this request, prepare the following budget schedules and financial statements.

1. Quarterly sales budget including a schedule of expected cash collections.

2. Quarterly production budget.

3. Quarterly direct materials budget including a schedule of expected cash disbursements for purchases of materials.

4. Quarterly direct labor budget.

5. Quarterly manufacturing overhead budget.

6. Ending finished goods inventory budget at December 31, 2019.

7. Quarterly selling and administrative expense budget.

8. Quarterly cash budget.

9. Income statement for the year ended December 31, 2019.

10. Balance sheet at December 31, 2019.

Required:

1. Calculate the following budgeted figures for 2019:

a. The total fixed cost.

b. The variable cost per unit sold.

c. The contribution margin per unit sold.

d. The break-even point in unit sales and dollar sales.

e. The margin of safety.

f. The degree of operating leverage

2. Prepare a budgeted variable costing income statement for 2019. Stop your computations at net operating income.

Answer 1

Manufacturing Overhead Budget
	Q1	Q2	Q3	Q4	Year
Budgdted direct labor hr	4,012.5	8,425.0	4,125.0	5,800.0	22,362.5
V. Factory OH rate	3	3	3	3	3
Variable manufacturing OH	12,037.50	25,275.00	12,375.00	17,400.00	67,087.50
Fixed manufacturing OH	150,000	150,000	150,000	150,000	600,000
Total manufacturing OH	162,037.50	175,275.00	162,375.00	167,400.00	667,087.50
Less: Depreciation	20,000	20,000	20,000	20,000	80,000
Cash Disbursement for MOH	142,037.50	155,275.00	142,375.00	147,400.00	587,087.50
Total Manufacturing OH					667,088
Budgdted Direct labor hr					22,362.50
Predetermined OH Rate					29.83
Manufacturing Overhead Budget
Item	Quantity	Cost	Total
Production Cost per Unit:
Direct Material	3.5	yards	3	per yard	10.50
Direct Labor	0.25	Hours	18	per hr	4.50
Manufacturing OH	0.25	Hours	29.83	per hr	7.46
Unit Product Cost					22.46
Budgdted Finished Goods Inventory:
Units from prior year's production					1500
Unit product Cost					21.50
Cost from prior year production					32,250.00
Units from current year productions					450
Unit product Cost					22.46
Cost from current year production					10,107
Cost of Ending finished goods inventory				42,357.00
Selling Expense Budget
	Q1	Q2	Q3	Q4	Year
Budgdted Unit Sales	12,000	37,000	15,000	25,000	89,000
Variable selling and admin exp per unit	1.25	1.25	1.25	1.25	1.25
Total variable selling expnse	15,000	46,250	18,750	31,250	111,250
Fixed selling and admin expense
Advertisement	25000	25,000	25,000	25,000	100,000
Executive Salaries	64000	64,000	64,000	64,000	256,000
Insurance	12000	12,000	12,000	12,000	48,000
Property TAXES	8000	8,000	8,000	8,000	32,000
Depreciation Expense	8000	8,000	8,000	8,000	32,000
Total fixed selling and admin exp	117,000	117,000	117,000	117,000	468,000
Total selling and admin expnese	132,000	163,250	135,750	148,250	579,250
Less: Depreciation	8,000	8,000	8,000	8,000	32,000
Total Budgdted selling expense	124,000	155,250	127,750	140,250	547,250
Cash Budget
	Q1	Q2	Q3	Q4	Year
Cash balance, beginning	46,200	30,000	244,649	314,337	46,200
Cash receipt from customer	548,000	984,000	656,000	720,000	2,908,000
Total cash available	594,200	1,014,000	900,649	1,034,337	2,954,200
Less: Cash Payments for
Direct Material	291,287	292,176	226,937	218,054	1,028,453
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Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company... Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for 2022 and reports a balance sheet at December 31, 2021 as follows: Endless Mountain Company Balance Sheet December 31, 2021 Assets Current assets: Cash $ 46,200 Accounts receivable (net) 260,000 Raw materials inventory (4,500 yards) 11,250 Finished goods inventory (1,500... Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company... Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for 2022 and reports a balance sheet at December 31, 2021 as follows: Endless Mountain Company Balance Sheet December 31, 2021 Assets Current assets: Cash $ 46,200 Accounts receivable (net) 260,000 Raw materials inventory (4,500 yards) 11,250 Finished goods inventory (1,500... Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company... Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for 2017 and reports a balance sheet at December 31, 2016 as follows: Endless Mountain Company Balance Sheet December 31, 2016 Assets Current assets: Cash $ 46,200 Accounts receivable (net) 260,000 Raw materials inventory (4,500 yards) 11,250 Finished goods inventory (1,500... Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company... Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for 2017 and reports a balance sheet at December 31, 2016, as follows: Endless Mountain Company Balance Sheet December 31, 2016 Assets Current assets: Cash $ 46,200 Accounts receivable 260,000 Raw materials inventory (4,500 yards) 11,250 Finished goods inventory (1,500 units)... Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company... Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for 2017 and reports a balance sheet at December 31, 2016 as follows: Endless Mountain Company Balance Sheet December 31, 2016 Assets Current assets: Cash $ 46,200 Accounts receivable (net) 260,000 Raw materials inventory (4,500 yards) 11,250 Finished goods inventory (1,500... Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company... Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for 2017 and reports a balance sheet at December 31, 2016 as follows: Endless Mountain Company Balance Sheet December 31, 2016 Assets Current assets: Cash $ 46,200 Accounts receivable (net) 260,000 Raw materials inventory (4,500 yards) 11,250 Finished goods inventory (1,500... 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