Theories: (2 points each)

1. A formal written statement of management’s plans for the future, packaged in financial terms, is a:
a. Responsibility report c. Cost of production report
b. Performance report d. Budget.
2. Budgets are related to which of the following management functions?
a. Planning c. Control
b. Performance Evaluation d. All of the Above
3. Which of the following advantages does a budget mostly provide?
a. Coordination is increased c. Evaluation of actual versus budgeted data
b. Communication is continuous d. Planning is emphasized
4. A series of budgets for varying levels of activity is a:
a. Zero – based budget c. Static Budget
b. Continuous Budget d. Flexible budget
5. Operating budgets are a forecast
a. On expected operating expenses. c. On units of production.
b. On operating expenses and related revenues. d. On income-generating activities of a firm
Computations: (5 points each) Solutions in Good form are required
1. PTO Company desires an ending inventory of P140,000. It expects sales of P800,000 and has a beginning inventory of P130,000. Cost of sales
is 65% of sales. Budgeted purchases are?
2. Lorie Company plans to sell 400,000 units of finished product in July and anticipates a growth rate in sales of 5% per month. The desired
monthly ending inventory in units of finished product is 80% of the next month’s estimated sales. There are 300,000 finished units in the
inventory on June 30. Each unit of finished product requires four pounds of direct materials at a cost of P2.50 per pound. There are 800,000
pounds of direct materials in the inventory on June 30. How many units should be produced for the three-month period ending September 30?
3. If there were 30,000 pounds of raw material on hand on January 1, 60,000 pounds are desired for inventory at December 31, and 180,000
pounds are required for annual production, how many pounds of raw material should be purchased during the year?
4. Wildwood Company budgeted purchases of 20,000 units. The budgeted beginning inventory was 4,800 units and the budgeted ending inventory
was 6,000 units. Budgeted sales were?
5. Bryce Company budgeted sales of 50,000 units for January, 60,000 for February. Bryce Company desires an ending inventory equal to one-half
of the following month's sales needs. Inventory on January 1 was as desired. Budgeted production for January is?
6. Rundall Co. makes payments for purchases 30% during the month of purchase and the remainder the following month. April purchases are
projected to be P160,000; May purchases will be P240,000. Cash payments in May will be?
7. Andover Inc. has projected sales to be: February, P10,000; March, P9,000; April, P8,000; May, P10,000; and June, P11,000. Andover has 30%
cash sales and 70% sales on account. Accounts are collected 40% in the month following the sale and 55% collected the second month. Total
cash receipts in May would be?
8. Equinox Company budgeted sales of 44,000 units for January, 60,000 for February. The budgeted beginning inventory for January 1 was 14,000
units. Equinox desires an ending inventory equal to one-half of the following month's sales needs. Budgeted production for January is?

Theories: (2 points each)

1. A formal written statement of management’s plans for the future, packaged in financial terms, is a:
a. Responsibility report c. Cost of production report
b. Performance report d. Budget.
2. Budgets are related to which of the following management functions?
a. Planning c. Control
b. Performance Evaluation d. All of the Above
3. Which of the following advantages does a budget mostly provide?
a. Coordination is increased c. Evaluation of actual versus budgeted data
b. Communication is continuous d. Planning is emphasized
4. A series of budgets for varying levels of activity is a:
a. Zero – based budget c. Static Budget
b. Continuous Budget d. Flexible budget
5. Operating budgets are a forecast
a. On expected operating expenses. c. On units of production.
b. On operating expenses and related revenues. d. On income-generating activities of a firm
Computations: (5 points each) Solutions in Good form are required
1. PTO Company desires an ending inventory of P140,000. It expects sales of P800,000 and has a beginning inventory of P130,000. Cost of sales
is 65% of sales. Budgeted purchases are?
2. Lorie Company plans to sell 400,000 units of finished product in July an anticipates a growth rate in sales of 5% per month. The desired
monthly ending inventory in units of finished product is 80% of the next month’s estimated sales. There are 300,000 finished units in the
inventory on June 30. Each unit of finished product requires four pounds of direct materials at a cost of P2.50 per pound. There are 800,000
pounds of direct materials in the inventory on June 30. How many units should be produced for the three-month period ending September 30?
3. If there were 30,000 pounds of raw material on hand on January 1, 60,000 pounds are desired for inventory at December 31, and 180,000
pounds are required for annual production, how many pounds of raw material should be purchased during the year?
4. Wildwood Company budgeted purchases of 20,000 units. The budgeted beginning inventory was 4,800 units and the budgeted ending inventory
was 6,000 units. Budgeted sales were?
5. Bryce Company budgeted sales of 50,000 units for January, 60,000 for February. Bryce Company desires an ending inventory equal to one-half
of the following month's sales needs. Inventory on January 1 was as desired. Budgeted production for January is?
6. Rundall Co. makes payments for purchases 30% during the month of purchase and the remainder the following month. April purchases are
projected to be P160,000; May purchases will be P240,000. Cash payments in May will be?
7. Andover Inc. has projected sales to be: February, P10,000; March, P9,000; April, P8,000; May, P10,000; and June, P11,000. Andover has 30%
cash sales and 70% sales on account. Accounts are collected 40% in the month following the sale and 55% collected the second month. Total
cash receipts in May would be?
8. Equinox Company budgeted sales of 44,000 units for January, 60,000 for February. The budgeted beginning inventory for January 1 was 14,000
units. Equinox desires an ending inventory equal to one-half of the following month's sales needs. Budgeted production for January is?