ITEMS 1 to 4 ARE BASED ON THE FOLLOWING INFORMATION:

Lady, Inc, manufactures leather bags with 3 zipper-type pockets. The company
outsources the zippers at P8 per unit. Each bag requires 5 direct labor hours to produce at a
rate of P10 per hour. Budgeted sales of bags for the first quarter of the year and the first month
of the following quarter are as follows:
January 900 units
February 1,000 units
March 1,500 units
April 1,800 units
Inventory data are as follows:
January 1: Leather bags 360
Zipper 1,620
End of each month:
Leather bags - 40% of the following month’s budgeted sales
Zipper - 60%of the following month’s production requirement

1. What is the budgeted production of leather bags for the first quarter?
a. 3,760
b. 3,040
c. 4,400
d. 3,400
2. What is the budgeted purchases of zipper for February?
a. 2,844
b. 1,956
c. 4,356
d. 3,600
3. What is the total budgeted zipper and labor costs for the month of March?
a. P55,080
b. P29,160
c. P122,472
d. P119,880
4. Assume that on the average, a full-time factory worker works 188 hours per month and
no overtime is allowed, how many full-time equivalent factory workers are needed to
produce the budgeted output of leather bags in January?
a. 5
b. 25
c. 100
d. 23.94

ITEMS 5 and 6 ARE BASED ON THE FOLLOWING INFORMATION:

Briggs Corporation has the following budget estimate for the year 200B:
Sales P 2,800,000
 Income before tax 10% of sales
Selling and administrative expenses 25% of sales
Conversion cost 70% of total manufacturing cost
Inventories are budgeted as follows:

Beginning Ending

Materials P 176,000 P216,000

Work-in-process 200,000 240,000
Finished good 280,000 336,000

5. The budgeted costs of goods sold is

a. P1,764,000
b. P1,820,000
c. P1,860,000
d. P1,400,000
6. The budgeted purchases of raw materials is
a. P614,800
b. P564,800
c. P534,800
d. P1,916,000
7. Moneth Corporation has the following sales budget for the second quarter of 200B:
April P 988,000
May 1,248,000
June 1,664,000
Other budget estimates are as follows:
● Merchandising is to be sold as its invoice cost plus 30% markup.
● Beginning inventory of each month is to be 40% of that month’s projected cost of
goods sold.
The budgeted merchandise purchases for the month of May is
a. P 990,080.
b. P1,088,000.
c. P960,000.
d. P832,000.

ITEMS 8 to 10 ARE BASED ON THE FOLLOWING INFORMATION:

Faye Corporation is preparing its factory overhead cost budget for the third quarter of
200B. The management plans to produce 200,000 units for the said quarter. Past
experience has shown that the company’s product is produced at rate of 4 units per
hour. Variable rates per direct labor hour are as follows:
Indirect materials and supplies P0.76
Power 1.36
Repairs and maintenance 2.80
 Other variable overhead 0.96
Total P5.88
Total fixed overhead cost is budgeted at P147,200. For product costing purposes, a fixed
factory overhead rate of P3.20 per direct labor hour has been established.

8. How much is the total budgeted factory overhead for the quarter?
a. P417,680
b. P454,000
c. P441,200
d. P294,000
9. The total factory overhead cost per unit of product is
a. P1.47.
b. P11.35.
c. P36.32.
d. P2.27.
10. How much is the expected capacity variance?
a. P12,800 unfavorable
b. P12,800 favorable
c. P11,776 unfavorable
d. P11,776 favorable
11. Robie Company uses the following flexible budget formula for the 1991 annual
maintenance cost in department T.
Total Cost = P7,200 + P.69 per machine hour
The July 1991 operating budget is based upon 20,000 hours of planned machine time.
Maintenance cost included in this flexible budget is
a. P11,400
b. P12,000
c. P12,600
d. P19,200
12. In preparing its budget for July 2020. Arden Company has the following accounts
receivable data available:
Accounts receivable at June 30, 2020 P350,000
Estimated credit sales for July 400,000
Estimated collections in July for credits sales
in July and prior months 320,000
Estimated write-offs in July for uncollectible
credit sales 16,000
Estimated provision for doubtful accounts
for credit sales in July 12,000
What is the projected ba;ance of accounts receivable at July 31,2020?
a. P402,000
b. P414,000
c. P426,000
d. P430,000
13. Grex Company is preparing its cash budget for the month of August 2020. Projections
for the month include the following:
Sales P400,000
Gross Profit rate 25%
Increase in inventories P30,000
Decrease in accounts payable 12,000
What are the estimated cash disbursements for inventory in August 2020?
a. P142,000
b. P312,000
c. P318,000
d. P342,000
14. Louie Company is preparing its cash budget for the Month of May. The following
information are available from Louie’s past collection experiences:
Current month’s sales 12%
Prior month’s sales 75%
Sales two months prior to current month 6%
Sales three months prior to current month 4%
Cash discounts taken 2%
Doubtful accounts 1%
Credit sales are as follows:
May-estimated P100,000
April 90,000
March 80,000
February 95,000
What are the estimated accounts receivable collections for May?
a. P85,100
b. P87,100
c. P88,100
d. P90,100
15. Cielo Corporation has budgeted the following transactions for 2020:
Sales (90% expected collections) P1,500,000
Estimated bad debts write-off 60,000
Estimated disbursements for cost
and expenses P1,200,000
Estimated disbursements for income taxes 90,000
Purchases of fixed assets 80,000
Proceeds from insurance of common stock 500,000
Proceeds from short-term borrowings 100,000
Payments on short-term borrowings 500,000
What is the budgeted cash balance on December 31,2020?
a. P150,000
b. P170,000
c. P210,000
d. P280,000