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Please prepare the three budgets by using the balance sheet and information: Tasneem Tire Company's balance sheet for December $31,2025,$ follows:

View the balance sheet.

View other data for Tasneem Tire Company.

Read the requirements. direct labor hours. Round all calculations to the nearest dollar.

Begin by preparing the sales budget. $($Unless otherwise noted, assume all of the following events are budgeted to occur in $2026$ and that any balances given are stated as of

December $31,2025.)$

a$.$ Budgeted sales are $800$ tires for the first quarter and expected to increase by $100$ tires per quarter. Cash sales are expected to be $30\%$ of

total sales, with the remaining $70\%$ of sales on account.

b$.$ Finished Goods Inventory on December $31,2025$ consists of $250$ tires at $$29$ each.

c$.$ Desired ending Finished Goods Inventory is $30\%$ of the next quarter's sales; first quarter sales for $2027$ are expected be $1,200$ tires. FIFO

inventory costing method is used.

d$.$ Raw Materials Inventory on December $31,2025,$ consists of $500$ 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\mathrm{.}00$ per pound.

f$.$ Desired ending Raw Materials Inventory is $20\%$ of the next quarter's direct materials needed for production; desired ending inventory for

December $31,2026,$ is $547$ pounds; indirect materials are insignificant and not considered for budgeting purposes.

g$.$ Each tire requires $0\mathrm{.}20$ hours of direct labor; direct labor costs average $$20$ per hour.

h$.$ Variable manufacturing overhead is $$2$ per tire.

i$.$ Fixed manufacturing overhead includes $$3,000$ per quarter in depreciation and $$4,820$ per quarter for other costs, such as utilities,

insurance, and property taxes.

j$.$ Fixed selling and administrative expenses include $$10,000$ per quarter for salaries; $$1,800$ per quarter for rent; $$500$ per quarter for

insurance; and $$600$ per quarter for depreciation.

k$.$ Variable selling and administrative expenses include supplies at $1\%$ of sales.

I. Capital expenditures include $$30,000$ for new manufacturing equipment, to be purchased and paid in the first quarter.

m$.$ Cash receipts for sales on account are $50\%$ in the quarter of the sale and $50\%$ in the quarter following the sale; December $31,2025,$

Accounts Receivable is received in the first quarter of $2026$; uncollectible accounts are considered insignificant and not considered for

budgeting purposes.

n$.$ Direct materials purchases are paid $75\%$ in the quarter purchased and $25\%$ in the following quarter. The December $31,2025,$ Accounts

Payable is paid in the first quarter of $2026.$

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

p$.$ Income tax expense is projected at $$2,000$ per quarter and is paid in the quarter incurred.

q$.$ Tasneem Tire Company desires to maintain a minimum cash balance of $$30,000$ 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 $12\%$ per year and paid at the beginning of the quarter based on the amount outstanding from the

previous quarter.

f$.$ Desired ending Raw Materials Inventory is $20\%$ of the next quarter?s direct materials needed for production; desired ending inventory for

December $31,2026,$ is $547$ pounds; indirect materials are insignificant and not considered for

budgeting purposes. Prepare the production budget.

View the sales budget that you prepared above.

Prepare the direct materials budget.

View the production budget that you prepared above.

Prepare the direct labor budget. $($Enter any hours per unit amounts to two decimal places, $x.xx,$ and round all other amounts to the nearest whole number.$)$

View the production budget that you prepared above.

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