Materials: Inventory, January 1 (16,000 units) P 960,000

Purchases 9,120,000
Available for use P10,080,000
Inventory, December 31 (18,500 units) 1,184,000 P 8,896,000
Labor 784,000
Factory overhead: Variable P 2,009,600
Fixed 1,120,000 3,129,600
Cost of goods manufactured (140,000 units) P12,809,600
Add finished goods inventory, January 1 (9,300 units) 744,000
Cost of goods available for sale P13,553,600
Less finished goods inventory, December 31 (3,300 units) 301,600
Budgeted cost of goods sold P13,255,000

The actual results for the first quarter of 2015 require the following changes in the budget
assumptions:
 The budgeted production for the year is expected to increase by 5,000 units.
During the first quarter, the company has already produced 25,000 units. The
balance of production will be scheduled in equal segments over the last 3 quarters
of the budget year.
 The expected finished goods inventory on January 1 dropped to only 9,000 units,
but its total value will not be revised anymore. The ending inventory value is
computed using the average manufacturing cost for the year.
 A new Labor Bill passed by Congress is expected to be signed into a law by the
President. The new law will take effect beginning the last quarter of the budget
year, including a provision for an increase of 8% in wage rates.
 The company uses the FIFO method in valuing its materials inventory. During the
first quarter, the company purchased 27,500 units of direct materials for
P1,760,000. The remaining direct materials requirement will be purchased evenly
for the last 9 months of the budget year. Effective July 1, 2015, the beginning of
the third quarter, direct materials cost is expected to increase by 5%. The
assumptions regarding the quantity of materials inventories at the beginning and
end of the year will remain unchanged.
 The variable factory overhead of P2,009,600 includes indirect materials and factory
supplies amounting to P889,600. It is computed at 10% of the cost of materials
used. The balance of the variable factory overhead varies directly with production.
 There will be no change in the budgeted fixed factory overhead cost.

Considering the given actual data for the first quarter, as well as the changes in
assumptions and estimates in the budgeted data for the year, the company’s accountant
prepared a revised budgeted cost of goods sold statement. This revised statement should
show:
 1.budgeted materials purchases of

2.budgeted cost of materials inventory at December 31, 2015 of

3.the budgeted direct labor cost of

4.the budgeted cost of goods manufactured of

5.the budgeted cost of goods sold of

Triple P Companies
CASH BUDGET
Company A Company B Company C
Beginning cash balance $100 $300 $700
Cash collections    ?  400    ?
Cash disbursements  500    ?  600
Cash excess (shortage)    ?    ?  400
Borrowing (repayments)  300  100    ?
Ending cash  200  200  100

6. Refer to Triple P Companies. For Company B, what are the budgeted cash disbursements?

7. Refer to Triple P Companies. For Company C, what are the budgeted cash collections?
 Krebs Company

Krebs Company is preparing its Manufacturing Overhead budget for the second quarter of the
year. Budgeted variable factory overhead is $3.00 per unit produced; budgeted fixed factory
overhead is $75,000 per month, with $16,000 of this amount being factory depreciation.

8. Refer to Krebs Company. If the budgeted production for April is 6,000 units, then the total
budgeted factory overhead for April is:

9. Refer to Krebs Company. If the budgeted production for May is 5,000 units, then the total
budgeted factory overhead per unit:

10. Refer to Krebs Company. If the budgeted cash disbursements for factory overhead for June are
$80,000, then the budgeted production for June must be: