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Agamata Chapter 7
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CHAPTER 6
BUDGETING
[Problem 1]
Zamboanga Company
Production Budget
For the Third Quarter, July-September, 200X
Budgeted sales
Add: Finished goods end.
(40% x next month's sales)
July
30,000
August
45,000
September
60,000
Total
135,000
18,000
48,000
10,000
38,000
24,000
69,000
18,000
51,000
20,000
80,000
24,000
56,000
20,000
155,000
10,000
145,000
[Problem 2]
Aparri Company
Budgeted Materials Purchases
For The Year Ended, December 31, 2005
Q1
80,000
3
240,000
Q2
120,000
3
360,000
Q3
200,000
3
600,000
Q4
180,000
3
240,000
Total
580,000
3
1,740,000
72,000
312,000
42,000
270,000
200 P
120,000
480,000
72,000
408,000
200 P
108,000
708,000
120,000
588,000
200 P
54,000(1)
594,000
108,000
486,000
200 P
54,000
1,794,000
42,000
1,752,000
200
[Problem 3]
a. Cagayan Corporation
Budgeted Production
For The Second Quarter, April-June 20__
April
90,000
May
98,000
June
45,000
Total
233,000
25,600 15,000
115,600 113,000
14,000 25,600
101,600 87,400
12,000
57,000
15,000
42,000
12,000
245,000
14,000
231,000
units
b. Cagayan Corporation
Budgeted Raw Materials Purchases
For The Second Quarter, April-June, 20__
April
101,600
4 lbs.
406,400
May
87,400
4 lbs.
349,600
June
42,000
4 lbs.
168,000
Total
231,000
4 lbs.
924,000
87,400
493,800
60,000
433,800
42,000
391,600
87,400
304,200
30000(1)
198,000
42,000
156,000
30,000
954,000
60,000
894,000
[Problem 4].
a. JVC Company
Budgeted sales
Add: Finished goods - ending (1)
Total goods
Less: Finished goods - beginning
Budgeted production
x DLH per unit
Budgeted DLH
x DL rate per hour
Budgeted direct labor wages
Pensions contribution (P0.25 / hr)
Workers' compensation insurance
January
February
March
10,000
12,000
8,000
16,000
12,500
13,500
26,000
24,500
21,500
16,000
16,000
12,500
10,000
8,500
9,000
2
2
2
20,000
17,000
18,000
P
8 P
8 P
8
160,000
136,000
144,000
5,000
4,250
4,500
Total
30,000
13,500
43,500
16,000
27,500
2
55,000
P
8
440,000
13,750
2,000
1,700
1,800
5,500
8,000
6,800
7,200
22,000
16,000
13,600
14,400
P 191,000 P 162,350 P 171,900
44,000
P 525,250
(1)
b. 1. Budgeted production - also used in direct materials purchase budget, factory overhead
budget and master budget
2. Budgeted direct labor hours - used in budgeted variable factory overhead and master
budget
[Problem 5]
a. Bacolod Corporation
Budgeted Production
For The Third Quarter, July September, 20A
Budgeted sales (units)
Add: Finished goods inventory - ending
(80% x next month's sales)
July
5,000
August
6,000
September
7,000
Total
18,000
4,800
9,800
5,600
4,200
5,600
11,600
4,800
6,800
5,600
12,600
5,600
7,000
5,600
23,600
5,600
18,000
Budgeted production
x Standard materials per unit
Materials requirement
Add: Materials inventory - ending (1)
Total materials
Less: Materials inventory - beginning
Materials purchase (units)
x Materials cost per unit
Materials purchase (pesos)
(1)
P
P
101
18,000
6
108,000
42,000
150,000
35,000
115,000
0.40
46,000
Materials
211
18,000
4
72,000
28,000
100,000
32,000
68,000
P
3.60 P
P
244,800 P
242
18,000
2
36,000
14,000
50,000
14,000
36,000
1.20
43,200
c. Bacolod Corporation
Budgeted Direct Labor Costs
For The Third Quarter, July September, 20A
Budgeted production (units)
X Standard hours per unit
Budgeted direct labor hours
X Direct labor rate per hour
Budgeted direct labor costs
Forming
18,000
0.80
14,400
P
8.00
P115,200
Assembly
18,000
2.00
36,000
P
8.00
P198,000
d. Bacolod Corporation
Budgeted Factory Overhead
For The Third Quarter, July September, 20A
Flexible
Budget
Variable overhead
Supplies
Electricity
Indirect labor
Other
Total variable overhead
Fixed overhead
Supervision
Property tax
Depreciation
Other
Total fixed overhead
Rate
per unit
(33,000 units)
P
2.20 P 72,600
1.00
33,000
2.00
66,000
0.80
26,400
P
6.00
198,000
30,000
3,600
33,200
16,200
83,000
Finishing
18,000
0.25
4,500
P
8.00
P 27,000
Total
54,900
P340,000
P 281,000
[Problem 6]
a. Ilocos Corporation
Sales Budget
For The Year Ended, December 31, 20B
Thingone
Thingtwo
60,000
40,000
P
70 P
100
P 4,200,000 P 4,000,000
b. Ilocos Corporation
Budgeted Production
For The Year Ended, December 31, 20B
Budgeted sales (units)
Add: Finished goods inventory - 01/01
Total goods available for use
Less: Afinished good inventory - 12/31
Budgeted production (units)
Thingone
60,000
20,000
80,000
25,000
55,000
Thingtwo
40,000
8,000
48,000
9,000
39,000
c. Ilocos Corporation
Budgeted Raw Materials Purchases
For the Year Ended, December 31,20B
Material
B
A
Budgeted materials need
Thingone (55,000 x 4 lbs.)
220,000 lbs.
110,000 lbs.
(55,000 x 2lbs.)
156,000
78,000
(39,000 x 2lbs.)
(39,000 x 1lb.)
P
P
376,000
36,000
412,000
32,000
380,000
8 P
3,040,000 P
188,000
32,000
220,000
29,000
191,000
5 P
955,000 P
d. Ilocos Corporation
Budgeted Direct Labor Cost Budget
For The Year ended, December 31, 20B
Budgeted production (units)
x No. of hours per unit
Direct labor hours
x Standard DL rate per hour
Budgeted direct labor cost
Thingone
55,000
2
110,000
P
8
P 880,000
Thingtwo
39,000
3
117,000
P
9
P 1,053,000
39,000 lbs.
39,000
7,000
46,000
6,000
40,000
3
120,000
e. Ilocos Corporation
Budgeted Finished Goods Inventory 12/31
December 31, 20B
Thingone
25,000
Thingtwo
9,000
42
58
16
27
(3 x P9)
( 3 x P2)
6
91
819,000
[Problem 7]
a. Sorsogon Corporation
Flexible Budgets
Rate
Variable costs
Direct materials (P2 x 4) P8.00/MH
Direct labor
1.50/MH
Supplies
0.80/MH
Utilities
1.20/MH
Maintenance
0.30/MH
Sub-total
P11.80/MH
Fixed costs
Utilities
Maintenance
Depreciation
Sub-total
Budgeted total costs
b. Variable costs (7,000 MH x P11.80)
Fixed costs
Budgeted cost 7,000 MH
c. Variable costs (8,000 MH x P11.80)
Fixed costs
6,000
P
Machine Hours
7,000
8,000
9,000
48,000 P
9,000
4,800
7,200
1,800
70,800
56,000 P
11,250
5,600
8,400
2,100
83,350
72,000 P
12,000
6,400
9,600
2,400
102,400
176,000
13,500
7,200
10,800
2,700
210,200
4,000
6,000
12,000
22,000
92,800 P
4,000
6,000
12,000
22,000
105,350 P
P 82,600
22,000
P104,600
4,000
6,000
12,000
22,000
124,400 P
4,000
6,000
12,000
22,000
232,200
P 94,400
22,000
P104,600
P 61,200
104,600
P(43,400) F
[Problem 8]
Abra Company
Schedule of Accounts Receivable Collections
July September 20__
Month of Sale
May
June
July
August
September
Credit
Sales
550,000
600,000
800,000
July
55,000
180,000
188,160
288,000
August
September
900,000
60,000
240,000
211,680
324,000
1,000,000
711,160
P
80,000
Total
55,000
240,000
796,160
210,000
745,680
235,200
360,000
885,200
595,200
P 835,680
P 2,432,040
30,000
90,000
25,000
145,000
8,000
30,000
144,000
182,000
8,000
5,000
54,000
120,000
187,000
a2. Advantage.It would reduce investment in accounts receivable balance, bad debts,
collection costs and would increase income on investment.
b. Strengthen collection policies:
b1. Risk.
Some customers may have an operating cycle longer than the offered
credit terms and may not have the ability to meet accelerated payments.
b2. Advantage.Increase cash inflows.
[Problem 10]
Lantoting Company
Budgeted Cash Payments to Merchandise Supplies
For the Month of May, 20__
Budgeted production
x Standard materials per unit
Materials used
Add: Materials inventory 5/1
(40% x 28,800)
Total materials
Less: Materials inventory - 5/31
(40% x 12,200 units x 3 units)
P
P
May
10,000
April
9,000
2,000
12,000
1,800
10,800
2,400
9,600
3
28,800
2,000
8,800
3
26,400
11,520
40,320
10,560
36,960
14,640
25,680
20
513,600
11,520
25,440
20
508,800
Payments to:
April purchases (P508,800 x 10/30 x 98%)
May purchases (P513,600 x 20/30 x 98%)
P
P
P
P
(20% x 9,000)
(40% x 26,400)
166,208
335,552
501,760
June
50,000
5,000
55,000
3,000
52,000
July
30,000
3,000
33,000
3,000
30,000
3
150,000
20,000
170,000
14,000
156,000
5
3
90,000
14,000
104,000
11,000
93,000
5
780,000
465,000
P 254,800
303,800
P 558,600
[Problem 12]
a. Budgeted cash disbursements in June and July:
June
July
Materials
Current month (P 243,600 x 54%)
1-month prior (P225,000 x 46%)
Wages and salaries
Marketing, general and administrative expenses
26,622
23,713
P 323,379 P 333,222
1)
Materials used (units)
Materials inventory - ending
(130% x next months production
requirements)
(12,200 x 130%)
May
11,900
June
11,400
14,820
15,600
July
12,000
15,860
(130% x 11,900)
(15,470)
11,250
20 P
225,000
P
(14,820)
13,180
20 P
243,600
P
(15,600)
12,260
20
245,200
May
P 31,860
211,266
90,750
P333,876
June
33,670 (P363,000 x 9%)
207,774
89,250
P329,694
84,672
21,600
February sales
February
March
Total
108,000
136,800
351,072
104,760
27,000
135,000
266,760
111,744
28,800
140,544
March sales
Total collections
106,272
239,760
412,344
758,376
89,200
73,800
36,900
125,000
26,400
17,000
368,300
(262,028)
60,400
90,600
45,300
125,000
33,000
17,000
371,300
(131,540)
65,600
98,400
49,200
125,000
35,200
17,000
390,400
21,944
215,200
262,800
131,400
375,000
94,600
51,000
1,130,000
(371,624)
Payments:
Materials supplies
Direct labor (Bud, Prod x P 30)
Variable OH (Bud. Prod x P 15)
Fixed OH (5000 x P 25)
Var. expenses (Sales x 11)
Fixed expenses (P 12000 x P5000)
Total
Net operating cash inflows (outflows)
Investing and financing activities:
C. Salonga investment
50,000
50,000
Bank loan
150,000
150,000
Acquisition of assets
(200,000)
(200,000)
Interest payments
(3,000)
(3,000)
(3,000)
(9,000)
Principal payments
(30,000)
(30,000)
Net investing and financing activities
(3,000)
(3,000)
(33,000)
(39,000)
Net cash inflows (outflows)
(265,028)
(134,340)
(11,056)
(410,624)
Add: Cash balance, beginning
0
10,000
10,000
0
Cash balance , ending, before
Financing
(265,028)
(124,540)
(1,056)
(410,624)
Borrowings
275,028
134,540
11,056
420,624
Cash balance - end
P 10,000 P 10,000 P 10,000 P
10,000
Schedules:
1.
Budgeted sales (@ 150)
Finished goods inventory - ending
[100 + (10% x next month's sales)]
January
2,400
February
3,000
March
3,200
400
420
500
(340)
2,460
(400)
3020
(420)
3,280
Budgeted production
2.
Budgeted materials purchases (units)
(2460 + 2000)
x Materials cost/unit
P
Budgeted materials purchase (pesos) P
4,460
20 P
89,200 P
[Problem 14]
a. Schedule of cash collections in September:
July credit sales (P 400,000 x 8%)
August credit sales (P 500,000 x 70%)
September credit sales (P 580,000 x 20%)
September cash sales
September collections
b. Schedule of payments to suppliers in September:
August purchases
September purchases (P 250,000 x 25%)
September payments to suppliers
c. Isabela Corporation
3,020
20 P
60,400 P
P
P
P
32,000
350,000
116,000
280,000
778,000
105,000
62,500
167,500
3,280
20
65,600
Cash budget
For The Month of September, 2000
Cash balance, Sept. 01
P
80,000
Add: Cash collections from sales
778,000
Total cash
858,000
Less: Payments:
To merchandise suppliers
P 167,500
Selling and administrative expenses
80,000
Dividends
40,000
287,500
Cash balance, Sept. 30
P
570,500
[Problem 15]
1. Cricket Company
Cash Budget
For The Month Ended, July 30, 20__
Cash balance, July 1
Add: Collections from customers:
June sales (P 30,000 x 48%)
P 14,400
July sales (P 40,000 x 50%)
20,000
Total cash
Less: Payments:
Merchandise suppliers
June purchase (P10,000 x 50%)
P 5,000
July purchase (P 15,000 x 50%)
7,500
12,500
Marketing and administrative expenses
10,000
Dividends
15,000
Cash balance before financing
Add: Borrowings (P 5,000 1,900)
Cash balance, July 31
5,000
34,400
39,400
37,500
1,900
3,100
5,000
Amount
October
November
December
P
245,000 P
210,000 P
30,000
P
1,050,000
315,000
630,000 P
73,500
900,000
270,000
540,000
850,000
75,000
P
525,000 P
930,000 P
688,500
Total
240,000
1,018,000
810,000
75,000
P2,143,500
b. La Union Corporation
Cash Budget
For The Fourth Quarter, October December 2000
October
November
December
525,000 P
930,000 P
688,500 P
Total
2,143,500
520,000
120,000
20,000
70,000
30,000
760,000
(235,000)
300,000
(12,000)
53,000
250,000
303,000 P
1,860,000
345,000
60,000
230,000
30,000
2,525,000
(381,500)
300,000
(36,000)
(117,500)
250,000
132,500
[Problem 17]
a. Collections from customers July 2007
Cash sales
July sales [(P 1,500,000 P 350,000) x 70%]
June sales
July collections
b. Cash payments to suppliers July 2007
July purchases (P 800,000 x 40%)
June purchases
July payments to suppliers
c. Ilocos Norte Corporation
Cash Budget
720,000
110,000
20,000
80,000
930,000
0
(12,000)
(12,000)
303,000
291,000 P
P
P
P
P
620,000
115,000
20,000
80,000
835,000
(146,500)
(12,000)
(158,500)
291,000
132,500 P
350,000
805,000
420,000
1,575,000
320,000
280,000
600,000
Operating expenses
Note payable paid
Equipment purchases
Interest
Cash balance, July 31
(1)
P
P
80,000
1,575,000
30,000
150,000
1,755,000
1,835,000
600,000
316,000
60,000
2,000
1,178,000
657,000
320,000
45,000
(60,000)
(23,000)
34,000
316,000
P
350,000
800,000
1,150,000
400,000
320,000
15,000
1,500,000
750,000
750,000
335,000
Operating Income
Add: Other revenues (1)
Interest expense
Net Income
(1)
415,000
26,500
(2,000)
24,500
439,500
30,000
(12,000)
14,500
3,000
(9,000)
26,500
[Problem 18]
a and b
Revenues earned/Expenses incurred
Accruals beginning
- ending
Prepayments beginning
- ending
Cash received/cash paid
(Revenues)
a
P 120,000
23,000
(40,000)
(22,000)
8,000
P 89,000
(Expenses)
b
P 90,000
12,000
(15,000)
(9,000)
11,000
P 89,000
[Problem 19]
Patz Company
Budgeted Income Statement
For The Second Quarter Ended, June 30, 20xx
Sales (P 500,000 + P 1,000,000)
Less: Cost of goods sold
Gross profit
Less: Operating expenses:
Variable marketing
Fixed marketing
Fixed administrative
Doubtful accounts (2% x 1.5 million)
Depreciation expense (P 800,000/20)
Net income
[Problem 20]
Mexia Inc.
Budgeted Income Statement
For The Year Ended, December 31, 2007
150,000
50,000
40,000
30,000
40,000
P
10,395
6,678
3,717
2,100
1,617
170
1,500,000
900,000
600,000
310,000
290,000
1,447
579
868
[Problem 21]
Easecom Company
Budgeted Income Statement
For The Year Ended, December 31, 2007
(in thousands)
Sales:
Equipment (P 6,000 x 110% x 106%)
P
Maintenance contracts (P 1,800 x 106%)
Less: Cost of goods sold (P 4,600 x 110% x 103%)
Gross profit
Less: Operating expenses:
Marketing (P 600 + P 250)
Administration
Distribution (P 150 x 110%)
Customer maintenance (P 1,000 + P 300)
Operating income
6,996
1,908
850
900
165
1,300
P
8,904
5,212
3,692
3,215
477
[Problem 22]
Mabuhay University
Motor Pool Division
Performance Report
For The Month of March 20xx
Variable Costs
Gasoline
Oil, minor repairs, parts and supplies
Outside repairs
Sub-total
Actual
Costs
5,323.00 P
380.00
50.00
5,753.00
Flexible
Budget
5,512.50 P
378.00
225.00
6,115.50
Variance
UF (F)
(189.50)F
2.00UF
(175.00)F
(362.50)F
Fixed Cost
Insurance
Salaries and benefits
Depreciation
Sub-total
Totals
Cost per mile (Costs + 63,000 miles)
(1)
525.00
2,500.00
2,310.00
5,335.00
11,088.00 P
500.00
2,500.00
2,200.00
5,200.00
11,315.50 P
25.00UF
0.00
110.00UF
135.00UF
(227.50)F
0.1760
0.1796
(0.0036)F
[Problem 23]
a.
Triple-F Health Club
Cash Budget
For The Year Ended October 31, 20C
(in thousands)
Receipts:
Annual membership fees (P 355 x 110% x 103%)
Lesson and class fee (P 234 x 234/180)
Miscellaneous (P 2 x 2/1.5)
Payments:
Managers salary and benefits (P 36 x 115%)
Regular employees wages and benefits (P 190 x 115%)
Lesson and class employee wages and benefits
(P 195 x 234/180 x 115%)
Travel and supplies (P 16 x 125%)
Utilities (P 22 x 125%)
Mortgage interest (P360 x 9%)
Miscellaneous (P2 x 125%)
Equipment payable
Accounts payable for supplies and utilities
Amortization of mortgage payable
Purchase of new equipment
Net cash inflows
Add: Cash balance - Oct. 31,20B
Cash balance - Oct. 31, 20C
402.2
304.2
2.7
P 708.9
41.4
218.5
291.5
20.0
27.5
32.4
2.5
10.0
2.5
30.0
25.0
701.3
7.6
7.3
P 14.9
only P7,600 in 20C, the required P60,000 annual savings would be extremely
difficult for the business to achieve.