Question

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: Accumulated Depreciation                                            (42,000)                135,000

Total Assets                                                                                                                $225,100

Liabilities

Current Liabilities:

   Accounts Payable                                                                                                   $ 8,000

Stockholder’s Equity

Common Stock, no par                                                            $ 130,000

Retained Earnings                                                                          87,100

   Total Stockholder’s Equity                                                                                   217,100

Total Liabilities and Stockholder’s Equity                                                          $225,100

Other data for Grilton Tire Company:

Budgeted Sales are 1,500 for the first quarter and expected to increase by 200 tires per quarter. Cash Sales are expected to be 30% of total sales, with the remaining 70% of sales on account.

Finished Goods Inventory on December 31, 2017 consists of 300 tires at $29 each.

Desired ending Finished Goods Inventory is 40% of the next quarter’s sales; first quarter sales for 2019 are expected to be 2,300 tires and second quarter sales for 2019 are expected to be 2,500. FIFO inventory costing method is used.

Direct Materials cost is $8 per tire.

Desired ending Raw Materials Inventory is 30% of the next quarter’s direct materials needed for production.

Each tire requires 0.40 hours of direct labor; direct labor costs average $16 per hour.

Variable manufacturing overhead is $2 per tire produced.

Fixed manufacturing overhead includes $4,500 per quarter in depreciation and $26,780 per quarter for other costs, such as utilities, insurance, and property taxes.

Fixed selling and administrative expenses include $8,000 per quarter for salaries; $1,800 per quarter for rent; $1,200 per quarter for insurance; and $500 per quarter for depreciation.

Variable selling and administrative expenses include supplies at 2% of sales.

Capital expenditures include $45,000 for new manufacturing equipment, to be purchased and paid in the first quarter.

Cash receipts for sales on account are 60% in the quarter of sale and 40% in the quarter following the sale. The December 31, 2017 Accounts Receivable ($40,000) is received in the first quarter of 2018.

Direct materials purchases are paid 70% in the quarter purchased and 30% in the following quarter. The December 31, 2017 Accounts Payable ($8,000) is paid in the first quarter of 2018.

Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred.

Income tax expense is projected at $3,500 per quarter and is paid in the quarter incurred.

Grilton desires to maintain a minimum cash balance of $35,000 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. Interest must be paid at the beginning of each quarter.

Prepare a sales budget in units and dollars for each quarter and in total for the year 2018.      (5 pts.)

Homework Answers

Answer #1
Sales Budget
Q1 Q2 Q3 Q4 Year
Expected Unit Sales          1,500          1,700          1,900          2,100          7,200
Sales Price 50 50 50 50 50
Total Sales       75,000       85,000       95,000     105,000     360,000

Dear Student,

Best effort has been made to give quality and correct answer. But if you find any issues please comment your concern. I will definitely resolve your query.

Also please give your positive rating.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
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, 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, 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:...
Anticipated sales for Sure Grip Tire Company were 39,000 passenger car tires and 12,000 truck tires....
Anticipated sales for Sure Grip Tire Company were 39,000 passenger car tires and 12,000 truck tires. Rubber and steel belts are used in producing passenger car and truck tires according to the following table: Passenger Car Truck Rubber 27 lbs. per unit 63 lbs. per unit Steel belts 3 lbs. per unit 8 lbs. per unit The purchase prices of rubber and steel are $3.4 and $4.5 per pound, respectively. The desired ending inventories of rubber and steel belts are...
Okay Company is preparing to build its master budget. The budget will detail each quarter’s activity...
Okay Company is preparing to build its master budget. The budget will detail each quarter’s activity and the activity for the year in total. The master budget will be based on the following information: a. This will be the first year of operation for Okay Company. b. Budgeted unit sales by quarter for 2019 are projected as follows: First quarter 6,500, Second quarter 6,000, Third quarter 6,100 & Fourth quarter 6,250. First and second quarter 2020 budgeted sales units is...
Anticipated sales for Sure Grip Tire Company were 47,000 passenger car tires and 14,000 truck tires....
Anticipated sales for Sure Grip Tire Company were 47,000 passenger car tires and 14,000 truck tires. Rubber and steel belts are used in producing passenger car and truck tires according to the following table: Passenger Car Truck Rubber 32 lbs. per unit 75 lbs. per unit Steel belts 7 lbs. per unit 18 lbs. per unit The purchase prices of rubber and steel are $3.4 and $4.5 per pound, respectively. The desired ending inventories of rubber and steel belts are...
Exercise 23-6 On January 1, 2017, the Hardin Company budget committee has reached agreement on the...
Exercise 23-6 On January 1, 2017, the Hardin Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2017. Sales units: First quarter 5,300; second quarter 6,000; third quarter 7,800 Ending raw materials inventory: 40% of the next quarter’s production requirements Ending finished goods inventory: 25% of the next quarter’s expected sales units Third-quarter production: 7,360 units. The ending raw materials and finished goods inventories at December 31, 2016, follow the same percentage...
P13-1 Prepare budgeted income statement and supporting budgets. Cook Farm Supply Company manufactures and sells a...
P13-1 Prepare budgeted income statement and supporting budgets. Cook Farm Supply Company manufactures and sells a pesticide called Snare. The following data are available for preparing budgets for Snare for the first 2 quarters of 2017. 1. Sales: quarter 1, 40,000 bags; quarter 2, 56,000 bags. Selling price is $60 per bag. 2. Direct materials: each bag of Snare requires 4 pounds of Gumm at a cost of $3.80 per      pound and 6 pounds of Tarr at $1.50 per...
On January 1, 2017, the Hardin Company budget committee has reached agreement on the following data...
On January 1, 2017, the Hardin Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2017. Sales units: First quarter 5,100; second quarter 6,300; third quarter 7,300 Ending raw materials inventory: 40% of the next quarter’s production requirements Ending finished goods inventory: 25% of the next quarter’s expected sales units Third-quarter production: 7,670 units. The ending raw materials and finished goods inventories at December 31, 2016, follow the same percentage relationships to...
Talladega Tire and Rubber Company has capacity to produce 289,000 tires. Talladega presently produces and sells...
Talladega Tire and Rubber Company has capacity to produce 289,000 tires. Talladega presently produces and sells 221,000 tires for the North American market at a price of $99 per tire. Talladega is evaluating a special order from a European automobile company, Autobahn Motors. Autobahn is offering to buy 34,000 tires for $81.75 per tire. Talladega’s accounting system indicates that the total cost per tire is as follows: Direct materials $38 Direct labor 14 Factory overhead (70% variable) 23 Selling and...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT