Endless Mountain Company manufactures a single product that ispopular with outdoor recreation enthusiasts. The company sells itsproduct to retailers throughout the northeastern quadrant of theUnited States. It is in the process of creating a master budget for2017 and reports a balance sheet at December 31, 2016 asfollows:

Endless Mountain Company
Balance Sheet
December 31, 2016
Assets
Current assets:
Cash	$	46,200
Accounts receivable (net)		260,000
Raw materials inventory (4,500yards)		11,250
Finished goods inventory (1,500units)		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
Currentliabilities:
Accounts payable				$	158,000
Stockholders’ equity:
Common stock	$	419,800
Retained earnings		379,900
Total stockholders’ equity					799,700
Total liabilities andstockholders’ equity				$	957,700

The company’s chief financial officer (CFO), in consultationwith various managers across the organization has developed thefollowing set of assumptions to help create the 2017 budget:

The budgeted unit sales are 12,000 units, 37,000 units, 15,000units, and 25,000 units for quarters 1-4, respectively. Notice thatthe company experiences peak sales in the second and fourthquarters. The budgeted selling price for the year is $32 per unit.The budgeted unit sales for the first quarter of 2018 is 13,000units.

All sales are on credit. Uncollectible accounts are negligibleand can be ignored. Seventy-five percent of all credit sales arecollected in the quarter of the sale and 25% are collected in thesubsequent quarter.

Each quarter’s ending finished goods inventory should equal 15%of the next quarter’s unit sales.

Each unit of finished goods requires 3.5 yards of raw materialthat costs $3.00 per yard. Each quarter’s ending raw materialsinventory should equal 10% of the next quarter’s production needs.The estimated ending raw materials inventory on December 31, 2017is 5,000 yards.

Seventy percent of each quarter’s purchases are paid for in thequarter of purchase. The remaining 30% of each quarter’s purchasesare paid in the following quarter.

Direct laborers are paid $18 an hour and each unit of finishedgoods requires 0.25 direct labor-hours to complete. All directlabor costs are paid in the quarter incurred.

The budgeted variable manufacturing overhead per directlabor-hour is $3.00. The quarterly fixed manufacturing overhead is$150,000 including $20,000 of depreciation on equipment. The numberof direct labor-hours is used as the allocation base for thebudgeted plantwide overhead rate. All overhead costs (excludingdepreciation) are paid in the quarter incurred.

The budgeted variable selling and administrative expense is$1.25 per unit sold. The fixed selling and administrative expensesper quarter include advertising ($25,000), executive salaries($64,000), insurance ($12,000), property tax ($8,000), anddepreciation expense ($8,000). All selling and administrativeexpenses (excluding depreciation) are paid in the quarterincurred.

The company plans to maintain a minimum cash balance at the endof each quarter of $30,000. Assume that any borrowings take placeon the first day of the quarter. To the extent possible, thecompany will repay principal and interest on any borrowings on thelast day of the fourth quarter. The company’s lender imposes asimple interest rate of 3% per quarter on any borrowings.

Dividends of $15,000 will be declared and paid in eachquarter.

The company uses a last-in, first-out (LIFO) inventory flowassumption. This means that the most recently purchased rawmaterials are the “first-out” to production and the most recentlycompleted finished goods are the “first-out” to customers.

Create:

1.Ending Finished Goods inventory budget (absorption costingbasis) For year end December 2017

2. Quarterly Cash budget for Year ended dec 31, 2017

3. Budgeted Balance Sheet at Dec 31, 2017