Use this information for the questions IE-9 through IE-12 The following informat

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Use this information for the questions IE-9 through IE-12 The following information applies to the questions displayed below Endiess Mountain Company manufactures a single product that is popular with outdoor recreation enthusilasts. The company se ts product to retallers throughout the northeastern quedrant 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: Endless Mountain Company Balance Sheet Assets Current assets Cash Accounts recelvable (net Raw materials inventory 14,500 yards) Finished goods inventory (1.500 units) s 46 200 260.000 1250 32.250 Total current assets Plant and equipment 5349.700 Buildings and equipment (292,000) Plant and equipment, net Total assets 608000 $ 957,700 Liablities and Stockholders' Equity Current liabilities: Accounts payable $ 158.000 Stockholders equity Common stock Retained earnings 5 419,800 379,900 Total stockholders' equity Total liabilities and stockholders equity 799700 957700 The company's chief financial officer (CFO), in consultation with various managers across the organization has developed the following set of assumptions to help create the 2017 budget: 1. 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 is 13,000 units 2. All sales are on credit. Uncollectible accounts are negligible and can be ignored Seventy-five percent of all credit sales are collected in the quarter of the sale and 25% are collected in the subsequent quarter. 3. Each quarter's ending finished goods inventory should equal 15% of the next quarter's unit sales. 4. Each unit of finished goods requires 3.5 yards of raw material that costs $3.00 per yard. Each quarter's ending raw materials 5. Seventy percent of each quarter's purchases are paid for in the quarter of purchase. The remaining 30% of each quarters 6. Direct laborers are paid $18 an hour and each unit of finished goods requires 0.25 direct labor-hours to 7. The budgeted variable manufacturing overhead per direct labor-hour is $3.00. The quarterly fixed manufacturing overhead is inventory should equal 10% of the next quarter's production needs. The estimated ending raw materials inventory on December 31, 2017 is 5,000 yards purchases are paid in the following quarter complete. All direct labor costs are paid in the quarter incurred $150.000 including $20.000 of depreciation on equipment. The number of direct labor-hours is used as the allocation base for the budgeted plantwide overhead rate. All overhead costs (excluding depreciation) are paid in the quarter incurred. 8. The budgeted variable selling and administrative expense is $125 per unit sold. The fixed seling and administrative expenses per quarter include advertising ($25.000) executive salaries ($64,000), insurance ($12.000), property tax ($8,000, and depreciation expense ($8.000). All selling an Incurred d administrative expenses (excluding depreciation) are paid In the quarter 9. The company plans to maintain a minimum cash balance at the end of each quarter of $30,000. Assume that any 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 3% per quarter on any 10. Dividends of $15,000 will be declared and paid in each quarter 11. The company uses a last-in, first-out (LIFO) inventory flow assumption. This means that the most recently purchased raw materials are the "first-out" to production and the most recenty completed finished goods are the "frst-out to customers

Explanation / Answer

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you. 1. Ending Finished Goods Inventory Budget Item Quantity Cost Total Production cost per unit: $ $ Direct Material 3.5 Yards 3 per yard 10.50 Direct Labor 0.25 Hours 18 per hour 4.50 Manufacturing Overhead 0.25 Hours 29.83 per hour 7.46 Unit Product Cost 22.457500 Raw Material Working Budgeted Finished Goods Inventory: Units from prior year production 1500 4500 Unit product Cost $21.50 2.5 Cost from prior year production $32,250 $11,250 Units from Current year production 1950-1500 450 500 Unit product Cost $22.46 3 Cost from Current year production $10,107 $1,500 Cost of Ending Finished Goods Inventory $42,357 $12,750 2. Income Statement $ Sales $2,848,000 Less Cost of Goods Sold $1,998,732 89000*Cost of Goods Sold (R/off) Gross Margin $849,268 Selling and Admin Expense $579,250 From Selling and Admin Schedule Net Operating Income $270,018 Interest Expense $9,642 From Cash Budget Net Income $260,376 3. Balance Sheet $ Assets Current Assets: -Cash $319,241 -Accounts Receivable 800000*25% $200,000 -Raw Material Inventory $12,750 -Finished Goods Inventory $42,357 Total Current Assets $574,348 Plant and Equipment -Building and Equipment $900,000 -Accumulated Dep -$404,000 Plant and Equipment Net $496,000 Total Assets $1,070,348 Liabilities and stockholder's Equity Current Liabilities: -Accounts Payable 234240*30% $70,272 Stockholder Equity: -Common Stock no par $419,800 -Retained Earning $580,276 =379900-60000+260168 Total Stockholder Equity $1,000,076 Total Liabilities and Stockholder Equity $1,070,348

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