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Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant 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
December 31, 2016
Assets
Current assets:
Cash	$	46,200
Accounts receivable (net)		260,000
Raw materials inventory (4,500 yards)		11,250
Finished goods inventory (1,500 units)		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
Current liabilities:
Accounts payable				$	158,000
Stockholders’ equity:
Common stock	$	419,800
Retained earnings		379,900
Total stockholders’ equity					799,700
Total liabilities and stockholders’ equity				$	957,700

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 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.
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 overhead per direct labor-hour is $3.00. The quarterly fixed manufacturing overhead is $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 $1.25 per unit sold. The fixed selling 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 and administrative expenses (excluding depreciation) are paid in the quarter incurred.
9. The company plans to maintain a minimum cash balance at the end of each 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 3% per quarter on any borrowings.
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 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.

1. Quarterly manufacturing overhead budget.

	1	2	3	4	Year
Budgeted Direct Labor Hours	4013.0	8425.0	4125.0	5800.0	22362.5
Variable MO per DL Hour	3	3	3	3	3
Variable MO	12039	25275	12375	17400	67088
Fixed MO	130000	130000	130000	130000	130000
Total MO	142039	155275	142375	147400	587088
Less depreciation	?	?	?	?	?
Cash Disbursements for MO	?	?	?	?	?
Total MO	?	?	?	?	?
Budgeted DLH	?	?	?	?	?
Predetermined overhead rate	?	?	?	?	?

I don't know the the cells with ? in them for the rest I believe I am right but if I am wrong please let me know. Showing work would be pretty cool.

2. Ending finished goods inventory budget at December 31, 2017. (Absorption Basis)

Item	Quantity	Cost	Total
Production Cost Per unit
Direct Materials	3.5 Yards	$3 Per Yard	?
Direct Labor	0.25 Hours	$18 Per Hour	?
Manufacturing Overhead	?	?	?
Unit Product Cost			?
Budgeted Finished goods Inventory
Units from Prior year Production			?
Unit Product Cost			?
Cost from Prior Years production
Units from current years production			?
Unit product cost			?
Cost from current years production
Cost of ending finished goods inventory

I am having a lot of issues with this question for some reason...Thank you for your help.

Answer 1

1. Quarterly manufacturing overhead budget

Particulars	Q1	Q2	Q3	Q4	Year
Budgeted direct labour hours	4012.5	8425	4125	5800	22362.5
Variable manufacturing per DL	3	3	3	3	3
Total Variable manufacturing OH	12037.5	25275	12375	17400	67087.5
Fixed MO	150000	150000	150000	150000	600000
Total MO	162037.5	175275	162375	167400	667087.5
Less depreciation	20000	20000	20000	20000	80000
Cash disbursement for MO	142037.5	155275	142375	147400	587087.5
Total MO	162037.5	175275	162375	167400	667087.5
Budget DLH	4012.5	8425	4125	5800	22362.5
Predetermined overhead rate	40.38	20.80	39.36	28.86	29.83

2. Finished goods inventory budget

Item	Quantity	cost	Total
Production cost per unit
Direct materials	3.5 yards	$3 per yard	$10.5
Direct labour	0.25 hours	$18 per hour	$4.5
Manufacturing overhead	0.25 hours	$29.83 per hour	$7.4575
Unit product cost			$22.4575
Budgeted Finished goods Inventory
Units from Prior year Production			1500
Unit Product Cost(32250÷1500)			21.5
Cost from Prior Years production			32250
Units from current years production			450
Unit Product Cost			$22.4575
Cost from current years production			$10,105.875
Cost of ending finished goods inventory			$42,355.875