ABC Company manufactures and sells a single product. Thefollowing information is available concerning the operations for1999. a. The company's single product sells for $60 per unit.Budgeted sales in units for the next four quarters are: 1999Quarter 1 3,000 Budgeted sales in units 1999 Quarter 2 3,500Budgeted sales in units 1999 Quarter 3 4,000 Budgeted sales inunits 1999 Quarter 4 4,500 Budgeted sales in units 2000 Quarter 15,000 Budgeted sales in units b. Sales are collected in thefollowing pattern: 80% in the quarter in which the sale is made,19% in the following quarter. On January 1, 1999, the company'sbalance sheet showed $60,000 in account receivables, all of whichwill be collected in the first quarter of the year 1999. Bad debtsare projected at 1% of quarterly sales. There is a -0- balance inthe AFDA account. c. The company requires an ending inventory offinished units on hand at the end of each quarter equal to 20% ofthe budgeted sales for the next quarter. This requirement was meton December 31, 19x8. (The company had 600 units on hand to startthe new-year). d. Two pounds (2lbs) of raw materials are requiredto complete one unit of product. The company requires an endinginventory of raw materials on hand at the end of each quarter equalto 10% of the production needs of the following quarter. Thisrequirement was met on December 31, 19x8. (The company had 620 lbsof raw materials on hand to start the new-year). Quarter 1 of thenext year (year 2000) is estimated at 10,200 lbs needed forproduction. e. The raw material costs $4.00 per pound. Purchases ofraw material are paid for in the following pattern: 50% paid in thequarter in which the purchase was made, and the remaining 50% ispaid in the following quarter. On January 1, 1999, the company'sbalance sheet showed $10,600 in accounts payable for raw materialpurchases. All of which will be paid for in the first quarter ofthe year 1999. f. Manufacturing overhead and selling &administrative expenses are paid in the quarter incurred. The onlyexception is depreciation. g. The manufacturing overhead budgetdistinguishes between variable and fixed overhead costs. Variablecosts fluctuate with production volume on the basis of thefollowing rates per direct labor hour: indirect materials $1.00,indirect labor $1.40, utilities $0.40, and maintenance $0.20. Fixedcosts per quarter are: Supervisory Salaries $20,000, Depreciation$3,800, Property Taxes & Insurance $9,000 and Maintenance$5,700. Overhead is applied to production on the basis of directlabor hours. The annual rate is $8 per hour. (Hint: TotalManufacturing Overhead for 1999 $246,400 / Direct Labor hours30,800 hours = $8/direct labor hour). h. Selling &administrative expense budget distinguishes between variable andfixed overhead costs. Variable costs are Sales Commissions of $3.00and Freight-Out $1.00. Variable expenses per quarter are based onthe unit sales projected in the sales budget. Fixed costs, perquarter, are: Advertising $5,000, Sales Salaries $15,000, OfficeSalaries $7,500 Depreciation $1,000 and Property Taxes &Insurance $1,500. i. January 1, 1999, cash balance is expected tobe $38,000. j. Marketable securities are expected to be sold for$2,000 cash in the first quarter. k. 2 hours of direct labor arerequired to produce each unit of finished goods and the anticipatedhourly wage rate is $10. Direct Labor is paid 100% in the quarterincurred. l. Management plans to purchase new factory equipment inthe second quarter for $50,000. m. Management plans to purchase newoffice computers in the third quarter for $12,000. n. Assumedepreciation on new purchases is accounted for quarterly budgeteddepreciation amounts. o. Management plans to sell old equipment atthe end of the fourth quarter for $3,000. Purchase price is$20,000, on January 1, 1996. Depreciation is calculated using thestraight-line method, useful life estimated at five years, with noresidual value. p. The company makes equal quarterly payments ofits estimated annual income taxes in the amount of $3,000 perquarter. q. Loans are repaid in the first subsequent quarter inwhich there is sufficient cash (incurring 8% interest if funds areborrowed.) r. A minimum cash balance of $20,000 is maintained perquarter. s. Budgeted balance sheet information as of December 31,1998 were: Building & Equipment $ 182,000, Common Stock $225,000, Accumulated Depreciation$ 28,800 and Retained Earnings of$ 46,480. prepare the following budgets and schedules for the year1999, showing both quarterly and the year total figuresManufacturing overhead budget Selling & administrative expensebudget Cash budget Finished goods inventory budget (Schedule)Budgeted income statement (Budgeted financial statement) Budgetedbalance sheet (Budgeted financial statement)