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x i Requirements 1. Prepare Gessing's operating budget and cash budget for 2025 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 2025, including budgeted income statement and budgeted balance sheet. Print Done i Data Table - Gessing Tire Company Balance Sheet December 31, 2024 Assets Current Assets Cash $ 67,000 Accounts Receivable 35,000 Raw Materials Inventory 9,600 17,400 Finished Goods Inventory Total Current Assets $ 129,000 Property, Plant, and Equipment: Equipment 168,000 (68,000) Less: Accumulated Depreciation 100,000 $ Total Assets 229,000 Liabilities Current Liabilities: Liabilities Current Liabilities: Accounts Payable $ 11,000 Stockholders' Equity Common Stock, no par $ 160,000 58,000 Retained Earnings Total Stockholders' Equity 218,000 Total Liabilities and Stockholders' Equity $ 229,000 The Gessing Tire Company manufactures racing tires for bicycles. Gessing sells tires for $75 each. Gessing is planning for the next year by developing a master budget by quarters. Gessing's balance sheet for December 31, 2024, follows (Click the icon to view the balance sheet.) More Info . (Unless otherwise noted, assume all of the following events occurred during 2024 and that any balances given are stated as of December 31, 2024.) a Budgeted sales are 2,000 tires for the first quarter and expected to increase by 200 tires per quarter. Cash sales are expected to be 10% of total sales, with the remaining 90% of sales on account b. Finished Goods Inventory on December 31, 2024 consists of 600 tires at $29 each. c. Desired ending Finished Goods Inventory is 40% of the next quarter's sales, first quarter sales for 2026 are expected be 2,800 tires. FIFO inventory costing method is used. d Raw Materials Inventory on December 31, 2024, consists of 1,200 pounds of rubber compound used to manufacture the tires. e. Direct materials requirements are two pounds of a rubber compound per tire. The cost of the compound is $8.00 per pound 1. Desired ending Raw Materials Inventory is 20% of the next quarter's direct materials needed for production, desired ending inventory for December 31, 2025 is 1,200 pounds, indirect materials are insignificant and not considered for budgeting purposes. 9. Each tire requires 0 80 hours of direct labor direct labor costs average $20 per hour. h. Variable manufacturing overhead is $1 per tire, Fixed manufacturing overhead includes $2,000 per quarter in depreciation and $44,170 per quarter for other costs, such as utilities, insurance, and property taxes. Fixed selling and administrative expenses include $11 000 per quarter for salaries, $1,800 per quarter for rent $1,800 per quarter for insurance, and $1,500 per quarter for depreciation k. Variable selling and administrative expenses include supplies at 2% of sales Capital expenditures include $40,000 for new manufacturing equipment, to be purchased and paid in the first quarter 1 I. m. Cash receipts for sales on account are 70% in the quarter of the sale and 30% in the quarter following the sale, December 31, 2024, Accounts Receivable is received in the first quarter of 2025, uncollectible accounts are considered insignificant and not considered for budgeting purposes. n. Direct materials purchases are paid 90% in the quarter purchased and 10% in the following quarter, December 31, 2024, Accounts Payable is paid in the first quarter of 2025. o. Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred p. Income tax expense is projected at $3,500 per quarter and is paid in the quarter incurred. q Gessing desires to maintain a minimum cash balance of $65,000 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 4% per year and paid at the beginning of the quarter based on the amount outstanding from the previous quarter Requirement 1. Prepare Gessing's operating budget and cash budget for 2025 by quarter Required schedules and budgets include sales budget, production budget direct materiais 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 Begin by preparing the sales budget Gessing Tire Company Sales Budget For the Year Ended December 31, 2025 First Second Third Fourth Quarter Quarter Quarter Quarter Budgeted tires to be sold 2,000 2,200 2.400 2,600 $ 75 S Sales pnce per unit 75 s 75$ 75 S $ 150,000 $185.000 180,000 $ 195,000 $ Total sales Total 9,200 75 690,000 Prepare the production budget Raw the sales budget you prepared above Prepare the production budget Review the sales budget you prepared above. Gessing Tire Company Production Budget For the Year Ended December 31, 2025 First Second Third Fourth Quarter Quarter Quarter Quarter Total 2.000 880 2,200 960 2,400 1,040 2,600 1,120 9,200 1.120 Budgeted tires to be sold Plus Desired tires in ending inventory Total tires needed Less: Tires in beginning inventory 2,880 600 3,160 880 3,440 960 3,720 1,040 10,320 600 2,280 2,280 2.480 2.680 9.720 Budgeted tires to be produced Prepare the direct materials budget Gessing Tire Company Direct Materials Budget For the Year Ended December 31, 2026 First Second Third Fourth Quarter Quarter Quarter Quarter Total Budgeted tires to be produced 2.280 2.680 9,720 2,280 2 2,480 2 2 2 Direct materials per tire 4.560 4.560 4,960 Direct materials needed for production Plus Desired direct materials in ending inventory 5,360 1,200 19.440 1 200 912 992 1,072 Total direct materials needed 5.472 5,552 6032 992 6.560 1,072 20,640 1200 1,200 912 4.272 4,840 5,040 Less Direct materials in beginning inventory Budgeted purchases of direct materials Direct materials cost per pound Budgeted cost of direct materials 5,488 8.00 $ 19.440 8.00 $ 8.00 S 8.00 S 8.00 S $ 34 1765 37 120 s 40,320 S 43,904 $ 155 520 Enter any number in the edit fields and then click Check Answer. Prepare the direct labor budget. (Enter any hours per unit amounts to two decimal places, XXX, and round all other amounts to the nearest whole number Review.the production budget you prepared above Gessing Tire Company Direct Labor Budget For the Year Ended December 31, 2025 First Second Third Fourth Quarter Quarter Quarter Quarter Total Budgeted tires to be produced 2.280 2,280 2,480 2.680 9,720 Direct labor hours per unit 0.80 0.80 0.80 0.80 0 80 Direct labor hours needed for production 1,824 1.824 1,984 2,144 7.776 Direct labor cost per hour S 20 $ 20 s 20$ 20$ 20 $ 36 480 $ 36,480 $ 39 680 S Budgeted direct labor cost 42 880 S 155 520 Gessing Tire Company Manufacturing Overhead Budget For the Year Ended December 31, 2025 First Second Third Fourth Quarter Quarter Quarter Quarter 2.280 2,280 2,480 2.680 $ 1$ 1 1s 1 Total 9,720 $ $ S 2,280 $ 2,280 $ 2,480 $ 2,680 $ 9,720 Budgeted tires to be produced VOH cost per tire Budgeted VOH Budgeted FOH Depreciation Utilities, insurance property taxes Total budgeted FOH Budgeted manufacturing overhead costs 2.000 2,000 44,170 2,000 44,170 2,000 44,170 8,000 176,680 44,170 46.170 46,170 46,170 46,170 184.680 S 48,450 $ 48,450 $ 48,650 $ 48,850 $ 194,400 Direct labor hours 1.824 1,824 1,984 2,144 7,776 x i Requirements 1. Prepare Gessing's operating budget and cash budget for 2025 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 2025, including budgeted income statement and budgeted balance sheet. Print Done i Data Table - Gessing Tire Company Balance Sheet December 31, 2024 Assets Current Assets Cash $ 67,000 Accounts Receivable 35,000 Raw Materials Inventory 9,600 17,400 Finished Goods Inventory Total Current Assets $ 129,000 Property, Plant, and Equipment: Equipment 168,000 (68,000) Less: Accumulated Depreciation 100,000 $ Total Assets 229,000 Liabilities Current Liabilities: Liabilities Current Liabilities: Accounts Payable $ 11,000 Stockholders' Equity Common Stock, no par $ 160,000 58,000 Retained Earnings Total Stockholders' Equity 218,000 Total Liabilities and Stockholders' Equity $ 229,000 The Gessing Tire Company manufactures racing tires for bicycles. Gessing sells tires for $75 each. Gessing is planning for the next year by developing a master budget by quarters. Gessing's balance sheet for December 31, 2024, follows (Click the icon to view the balance sheet.) More Info . (Unless otherwise noted, assume all of the following events occurred during 2024 and that any balances given are stated as of December 31, 2024.) a Budgeted sales are 2,000 tires for the first quarter and expected to increase by 200 tires per quarter. Cash sales are expected to be 10% of total sales, with the remaining 90% of sales on account b. Finished Goods Inventory on December 31, 2024 consists of 600 tires at $29 each. c. Desired ending Finished Goods Inventory is 40% of the next quarter's sales, first quarter sales for 2026 are expected be 2,800 tires. FIFO inventory costing method is used. d Raw Materials Inventory on December 31, 2024, consists of 1,200 pounds of rubber compound used to manufacture the tires. e. Direct materials requirements are two pounds of a rubber compound per tire. The cost of the compound is $8.00 per pound 1. Desired ending Raw Materials Inventory is 20% of the next quarter's direct materials needed for production, desired ending inventory for December 31, 2025 is 1,200 pounds, indirect materials are insignificant and not considered for budgeting purposes. 9. Each tire requires 0 80 hours of direct labor direct labor costs average $20 per hour. h. Variable manufacturing overhead is $1 per tire, Fixed manufacturing overhead includes $2,000 per quarter in depreciation and $44,170 per quarter for other costs, such as utilities, insurance, and property taxes. Fixed selling and administrative expenses include $11 000 per quarter for salaries, $1,800 per quarter for rent $1,800 per quarter for insurance, and $1,500 per quarter for depreciation k. Variable selling and administrative expenses include supplies at 2% of sales Capital expenditures include $40,000 for new manufacturing equipment, to be purchased and paid in the first quarter 1 I. m. Cash receipts for sales on account are 70% in the quarter of the sale and 30% in the quarter following the sale, December 31, 2024, Accounts Receivable is received in the first quarter of 2025, uncollectible accounts are considered insignificant and not considered for budgeting purposes. n. Direct materials purchases are paid 90% in the quarter purchased and 10% in the following quarter, December 31, 2024, Accounts Payable is paid in the first quarter of 2025. o. Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred p. Income tax expense is projected at $3,500 per quarter and is paid in the quarter incurred. q Gessing desires to maintain a minimum cash balance of $65,000 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 4% per year and paid at the beginning of the quarter based on the amount outstanding from the previous quarter Requirement 1. Prepare Gessing's operating budget and cash budget for 2025 by quarter Required schedules and budgets include sales budget, production budget direct materiais 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 Begin by preparing the sales budget Gessing Tire Company Sales Budget For the Year Ended December 31, 2025 First Second Third Fourth Quarter Quarter Quarter Quarter Budgeted tires to be sold 2,000 2,200 2.400 2,600 $ 75 S Sales pnce per unit 75 s 75$ 75 S $ 150,000 $185.000 180,000 $ 195,000 $ Total sales Total 9,200 75 690,000 Prepare the production budget Raw the sales budget you prepared above Prepare the production budget Review the sales budget you prepared above. Gessing Tire Company Production Budget For the Year Ended December 31, 2025 First Second Third Fourth Quarter Quarter Quarter Quarter Total 2.000 880 2,200 960 2,400 1,040 2,600 1,120 9,200 1.120 Budgeted tires to be sold Plus Desired tires in ending inventory Total tires needed Less: Tires in beginning inventory 2,880 600 3,160 880 3,440 960 3,720 1,040 10,320 600 2,280 2,280 2.480 2.680 9.720 Budgeted tires to be produced Prepare the direct materials budget Gessing Tire Company Direct Materials Budget For the Year Ended December 31, 2026 First Second Third Fourth Quarter Quarter Quarter Quarter Total Budgeted tires to be produced 2.280 2.680 9,720 2,280 2 2,480 2 2 2 Direct materials per tire 4.560 4.560 4,960 Direct materials needed for production Plus Desired direct materials in ending inventory 5,360 1,200 19.440 1 200 912 992 1,072 Total direct materials needed 5.472 5,552 6032 992 6.560 1,072 20,640 1200 1,200 912 4.272 4,840 5,040 Less Direct materials in beginning inventory Budgeted purchases of direct materials Direct materials cost per pound Budgeted cost of direct materials 5,488 8.00 $ 19.440 8.00 $ 8.00 S 8.00 S 8.00 S $ 34 1765 37 120 s 40,320 S 43,904 $ 155 520 Enter any number in the edit fields and then click Check Answer. Prepare the direct labor budget. (Enter any hours per unit amounts to two decimal places, XXX, and round all other amounts to the nearest whole number Review.the production budget you prepared above Gessing Tire Company Direct Labor Budget For the Year Ended December 31, 2025 First Second Third Fourth Quarter Quarter Quarter Quarter Total Budgeted tires to be produced 2.280 2,280 2,480 2.680 9,720 Direct labor hours per unit 0.80 0.80 0.80 0.80 0 80 Direct labor hours needed for production 1,824 1.824 1,984 2,144 7.776 Direct labor cost per hour S 20 $ 20 s 20$ 20$ 20 $ 36 480 $ 36,480 $ 39 680 S Budgeted direct labor cost 42 880 S 155 520 Gessing Tire Company Manufacturing Overhead Budget For the Year Ended December 31, 2025 First Second Third Fourth Quarter Quarter Quarter Quarter 2.280 2,280 2,480 2.680 $ 1$ 1 1s 1 Total 9,720 $ $ S 2,280 $ 2,280 $ 2,480 $ 2,680 $ 9,720 Budgeted tires to be produced VOH cost per tire Budgeted VOH Budgeted FOH Depreciation Utilities, insurance property taxes Total budgeted FOH Budgeted manufacturing overhead costs 2.000 2,000 44,170 2,000 44,170 2,000 44,170 8,000 176,680 44,170 46.170 46,170 46,170 46,170 184.680 S 48,450 $ 48,450 $ 48,650 $ 48,850 $ 194,400 Direct labor hours 1.824 1,824 1,984 2,144 7,776

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