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Required Information [The following information applies to the questions displayed below) Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sell its product to retailers throughout the northeastern quocirant of the United States. It is in the process of creating a master budget for 2017 and reports a balance sheet at December 31, 2016 as follows: $ 46,200 260, 11.25 32,25 $340,00 Endless Mountain Company Balance Shout December 31, 2016 Assets Current ts: Cash Accounts receivable (net) Raw materials inventory (4.500 yards) Finished goods inventory (1,see units) Total current assets Plant and equipment: Buildings and equipment Accumulated depreciation Plant and equipment, net Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Stockholders' equity Common stock Retained earnings Total stockholders' quity Total liabilities and stockholdersequity 980, 292,0) be $957,00 $158, 379,900 799,00 $952.780 The company's chief financial officer (CFO). In consultation with various managers scross the organization has developed the following set of assumptions to help create the 2017 budget 2. The budgeted unit sales are 12.000 units, 37.000 units, 15,000 units, and 25,000 units for quarters 1-4, respectively. Notice that the company experiences peak sales in the second and fourth quarters. The budgeted selling price for the year is $32 per unit. The budgeted unit sales for the first quarter of 2018 - 13.000 units. 2 All sales are on credit Uncollect ble accounts are negligible and can be ignored. Seventy-five percent of all credit zales are collected in the quarter of the sale and 25% are collected in the subsequent quarter 3. Esch quarter's ending finished goods inventory should equal 15% of the next quarter's unit sales. 4 Esch unit of finished goods requires 3.5 yards of raw material that costs $3.00 per yard. Esch qusrte's ending raw materials inventory should equal 10% of the next quarter's production needs. The estimated ending raw materials Inventory on December 31, 2017 - 5,000 yards. 5. Seventy percent of each quarter's purchases are paid for in the quarter of purchase. The remaining 30% of each quarter's purchases are paid in the following quarter. 6. Direct laborers are paid $18 an hour and each unit of finished goods requires 0.25 direct labor-hours to complete. All direct labor costs are paid in the quarter incurred 7. The budgeted variable manufacturing overhesd per direct labor-hour is $3.00. The quarterly fixed manufacturing overhead to $150,000 Including $20.000 of depreciation on equipment. The number of direct labor-hours is used as the allocation bese for the budgeted plentwide overhead rate. All overhead costs exclucing depreciation are paid in the quarter incurred. 8. The budgeted variable selling and administrative expenses $1.25 per unit sold. The foed selling and administrative expenses per quarter include advertising ($25,000). executive salaries ($64.000. Insurance $12.0001, property tax $8,000), and depreciation expense $8,000). All selling and scministrstve expenses (excluding depreciation are paid In the quarter incurred. 9. The company plans to maintain a minimum cash balance at the end of esch quarter of $30,000. Assume that any borrowings take place on the first day of the quarter. To the extent possible, the company will repay principal and Interest on any borrowings on the last day of the fourth quarter. The company's lender imposes a simple interest rate of 356 per quarter on any borrowings 10. Dividends of $15,000 will be declared and paid in each quarter. 11. The company uses a lost in, first-out [LIFO, inventory flow sssumption. This means that the most recently purchased raw materias sre the first out to production and the most recently completed finished goods are the first-out" to customers. Required: The company's CFO has asked you to prepare the 2017 master budget. To fulfill this request prepare the following budget schedules and financial statements 5. Quarterly manufacturing overhead budget 6. Endling finished goods inventory budget at December 31, 2017 7. Quarterlyseing and administrative expense budget 2. Quarterly cash budget 9. Income statement for the year ended December 31, 2017 10. Balance sheet at December 31, 2017

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