33 A P2,900 Cash balance beginning 3,500.

00
Add, collections in March 14,000.00
Less, payments in March (21,100.00)
Balance (3,600.00)
Required minimum balance 2,500.00
Amount borrowed 6,500.00
Cash balance ending ( P6,500 -3,600) 2,900.00

34 C 13,838 Total production 30,000 x 4 months 120,000

Less January sales 25,000
February sales2 5,000 x 1.04 26,000
March sales 26,000 x 1.04 27,040
April sales 27,040 x 1.04 28,122 106,162
Number of units on hand in April 13,838

35 D 450,000 units 480,000 + 50,000 - 80,000 = 450,000

PROBLEMS

7.1 April sales P200,000 x 8% = 16,000.00

May sales P420,000 x 50% = 210,000.00
June sales P350,000 x 40% = 140,000.00
Total collections in June 366,000.00

7.2 Product A Product B Product C

January February January February January February
Required EI 2,250 2,750 3,000 2,500 2,000 2,500
Projected sales 10,000 9,000 11,000 12,000 12,000 8,000
Total production 12,250 11,750 14,000 14,500 14,000 10,500
Required BI (2,500) (2,250) (2,750) (3,000) (3,000) (2,000)
Budgeted production 9,750 9,500 11,250 11,500 11,000 8,500

Material X Purchases
Product A Product B Product C
January February January February January February
Production 9,750 9,500 11,250 11,500 11,000 8,500
x lbs required per unit 2 2 2 2 3 3
Total used 19,500 19,000 22,500 23,000 33,000 25,500

Required EI (19,000 + 23,000 + 25,500) x .50 = 33,750.00

Required in prodution for january (19,500 + 22,500 + 33,000 ) = 75,000.00
Total raw materials X required 108,750.00
Less, Required BI ( 75,000 x .50) = 37,500.00
Materials X to be purchased in January, in lbs 71,250.00
x Cost per lb of Material X 4.00
Budgeted Cost of Material X for January 285,000.00
 Material Y Purchases
Product A Product B Product C
January February January February January February
Production 9,750 9,500 11,250 11,500 11,000 8,500
x lbs required per unit 3 3 1 1 2 2
Total used 29,250 28,500 11,250 11,500 22,000 17,000

Required EI (28,500 + 11,500 + 17,000) x .50 = 28,500.00

Required in prodution for january (29,250 + 11,250 + 22,000 ) = 62,500.00
Total raw materials Y required 91,000.00
Less, Required BI ( 62,500 x .50) = 31,250.00
Materials Y to be purchased in January, in lbs 59,750.00
x Cost per lb of Material Y 3.00
Budgeted Cost of Material Y for January 179,250.00

Material Z Purchases
Product A Product B Product C
January February January February January February
Production 9,750 9,500 11,250 11,500 11,000 8,500
x lbs required per unit 2 2 2 2 2 2
Total used 19,500 19,000 22,500 23,000 22,000 17,000

Required EI (19,000 + 23,000 + 17,000) x .50 = 29,500.00

Required in prodution for january (19,500 + 22,500 + 22,000 ) = 64,000.00
Total raw materials Z required 93,500.00
Less, Required BI ( 64,000 x .50) = 32,000.00
Materials Z to be purchased in January, in lbs 61,500.00
x Cost per lb of Material Z 5.00
Budgeted Cost of Material Z for January 307,500.00

Total budgeted cost of purchases of all raw materials for the month of January 771,750.00

7.3
Revenues 100,000.00
Less, Cost of goods sold 65,000.00
Gross Margin 35,000.00
Less. General & Administrative expenses 30,000.00
Net income before taxes 5,000.00
Income tax at 40% rate 2,000.00
Net income after tax 3,000.00
 * Cost of goods sold schedule
Raw materiasl used (production budget) 15,000.00
Direct labor costs (labor budget) 20,000.00
Manufacturing overhead (overhead budget) 20,000.00
Total current manufacturing costs 55,000.00
Add, Work in progress beginning 10,000.00
Total in process 65,000.00
Less, Work in progress ending 5,000.00
Total cost of goods manufactured 60,000.00
Add, Finished goods beginning 15,000.00
Total available for sales 75,000.00
Less, Finished goods ending 10,000.00
Cost of goods sold 65,000.00

7.4 Cash receipts:

From the month of sale - June P85,000 x 70% 59,500.00
From a month after sale - May P90,000 x 20% 18,000.00
From 2 months after sale - April P80,000 x 10% 8,000.00
Total 85,500.00
Cash Disbursements:
Purchases from May with discount P40,000 x 98% 39,200.00
Operating expenses 5,000.00
Total 44,200.00
Net change in cash for June - increase 41,300.00

7.5 a Actual of 2018 Budgeted of 2019

November December January February March
Sales 80,000.00 90,000.00 70,000.00 90,000.00 30,000.00
Purchases 70,000.00 80,000.00 70,000.00 60,000.00 50,000.00

Beginning cash balance 4,500.00 2,600.00 300.00

Cash receipts:
From current months sales 40% of sales 28,000.00 36,000.00 12,000.00
From prior month sales 60% balance 54,000.00 42,000.00 54,000.00
Total collections 82,000.00 78,000.00 66,000.00
Cash available 86,500.00 80,600.00 66,300.00
Cash disbursements:
From purchases:
From current month 20% of purchase 14,000.00 12,000.00 10,000.00
From 1 month after purchase 50% of purchase 40,000.00 35,000.00 30,000.00
From 2 months after purchae 30% of purchase 21,000.00 24,000.00 21,000.00
Total payments for purchase 75,000.00 71,000.00 61,000.00
Labor expenses 4,000.00 4,000.00 4,000.00
Sales salaries 2,000.00 2,000.00 2,000.00
Commissions at 2% of current months sales 1,400.00 1,800.00 600.00
Other expenses excluding depreciation of P500 1,500.00 1,500.00 1,500.00
Total cash disbursements 83,900.00 80,300.00 69,100.00
Ending cash balance 2,600.00 300.00 (2,800.00)

b Invest in January and February; Borrow for March

7.6
june july august
Sales budget
Credit sales 30% 120,000.00 132,000.00 150,000.00
Cash sales 70% 280,000.00 308,000.00 350,000.00
Total sales 100% 400,000.00 440,000.00 500,000.00
Cash collection budget
Cash sales this month 280,000.00 308,000.00 350,000.00
100% of last months credit sales 150,000.00 120,000.00 132,000.00
Total collections 430,000.00 428,000.00 482,000.00

7.7
january february march
Sales budget
Credit sales 80% 144,000.00 168,000.00 216,000.00
Cash sales 20% 36,000.00 42,000.00 54,000.00
Total sales 100% 180,000.00 210,000.00 270,000.00
Cash collection budget
Cash sales this month 36,000.00 42,000.00 54,000.00
50% of this month's credit sales 72,000.00 84,000.00 108,000.00
40% of last month's credit sales 60,800.00 57,600.00 67,200.00
10% of next-to- last month's credit sales 20,000.00 15,200.00 14,400.00
Total collections 188,800.00 198,800.00 243,600.00

7.8 Collections from:

January sales P300,000 x 12% 36,000.00
February sales P400,000 x 10% x 99% 39,600.00
P400,000 x 25% 100,000.00
March sales P500,000 x 50% x 99% 247,500.00
Total cash collections 423,100.00

7.9 Budgeted Cash Receipts and Disbursements for April:

Cash balance, March 31 80,000.00
Add, Collections from customers:
From April sales, 50% x P1,000,000 500,000.00
From March sales, 4/5 x P450,000 360,000.00
From February sales 60,000.00 920,000.00
Total cash available fefore current financing 1,000,000.00
note that the AR balance from March sales at March 31 is P450,000, therefore 4/5 will be received in April.
Less, Disbursements:
Merchandise purchases, P500,000 x 40% 200,000.00
Payment on Accounts Payable 450,000.00
Payrolls 90,000.00
Insurance premium 1,500.00
Other expenses 45,000.00
Repayment of loan and interest 94,500.00 881,000.00
Cash balance, April 30 119,000.00
7.10 june july august
Purchases budget:
Desired Ending inventory 220,000.00 270,000.00 230,000.00
Desired Cost of sales, 60% of sales 264,000.00 210,000.00 240,000.00
Total requirements 484,000.00 480,000.00 470,000.00
Desired Beginning inventory 250,000.00 220,000.00 270,000.00
Desired Purchases 234,000.00 260,000.00 200,000.00

Disbursements for purchases

10% of this month's purchases 23,400.00 26,000.00 20,000.00
80% of last month's purchases * 144,000.00 187,200.00 208,000.00
10% of second last month's purchases ** 25,000.00 18,000.00 23,400.00
192,400.00 231,200.00 251,400.00
P180,000 x 80% = P144,000 *
P250,000 x 10% = P25,000 **

7.11
July August September
Desired Production a 10,000 8,000 20,000
Desired usage per pencil b 10 10 10
Required usage per 1 foot c = (a / b) 1,000 800 2,000
Desired Ending inventory d 160 400 480
Total Requirements e =(c + d) 1,160 1,200 2,480
Desired beginning inventory f 200 160 400
Desired purchases g (e - f) 960 1,040 2,080
converted to an eight foot section g/8 8 8 8
number of pcs. In and 8-ft per pc. h 120 130 260
Price per eight foot section I 2.00 2.00 2.00
Total Budgeted Purchases j = (h x I) 240.00 260.00 520.00

7.12
a Summary of collections
October November December
Current month's collections:
October P12,500 x 25% x 97% 3,031.25
November P20,000 x 25% x 97% 4,850.00
December P35,000 x 25% x 97% 8,487.50
Month following sale:
October P15,000 x 60% 9,000.00
November P12,500 x 60% 7,500.00
December P20,000 x 60% 12,000.00
Two months following sale:
October P10,000 x 13% 1,300.00
November P15,000 x 13% 1,950.00
December P12,500 x 13% 1,625.00
13,331.25 14,300.00 22,112.50
 b Summary of cash disbursements
October November December
Current month's purchases:
October P4,000 x 20% x 98% 784.00
November P6,000 x 20% x 98% 1,176.00
December P5,000 x 20% x 98% 980.00
Month following purchases:
October P5,000 x 80% 4,000.00
November P4,000 x 80% 3,200.00
December P6,000 x 80% 4,800.00
4,784.00 4,376.00 5,780.00

7.13 Bestwood, Inc.

Statement of Cash Receipts and Disbursements
For the month of October,
Cash balance beginning 12,000.00
Add:Cash Receipts
Collection of accounts receivable
Month of sale (P50,000 x 30% x 98%) 14,700.00
Month following sale (P40,000 x 50%) 20,000.00
Two months following sale (P20,000 x 17%) 3,400.00 38,100.00
Issuance of common stock 4,000.00 42,100.00
Total Cash available 54,100.00
Less:Cash Disbursements
Payments of accounts payable
Month of purchase (P28,000 x 30% x 97%) 8,148.00
Month following purchase (P24,000 x 70%) 16,800.00 24,948.00
Labor costs (P50,000 x 10%) 5,000.00
Operating costs (P20,000 - P8,000) 12,000.00
Dividends 10,000.00 51,948.00

Cash balance , ending 2,152.00

Minimum required cash balance 6,000.00
Required additional cash 3,848.00
Amount to be borrowed 4,000.00
Cash balance ending 6,152.00

7.14
1 Purchasing automated assemby equipment:
Increase in variable overhead P80,000 x 12% 9,600.00
Increase in fixed costs 20,000.00
Decrease in direct labor cost P80,000 x 30% (24,000.00)
Net increase in costs , means decrease in profits 5,600.00
 2 Reduce the unit selling price by P2 per unit:
Increase in sales due to increase in volume (P28 x 40,000) - P600,000 520,000.00
Less: Increase in variable costs (20,000 x (P320,000 / 20,000) (320,000.00)
Increase in fixed factory overhead (16,000.00)
Increase in net income 184,000.00

7.15
a Collections for the month of December
November sales P200,000 x 38% 76,000.00
December sales P220,000 x 60% 132,000.00
208,000.00
b Compute the budgeted income or loss for December
(Please indicate additional requirement omitted in the textbook)
Sales 220,000.00
Less Cost of sales (75% of sales) 165,000.00
Gross Profit 55,000.00
Less Operating Expenses:
Bad debts expense (2% of sales) 4,400.00
Depreciation expense (P216,000 / 12 months) 18,000.00
Other expenses 22,600.00 45,000.00
Net income before income taxes 10,000.00

7.16 Camelott Company

Budgeted Income Statement
For the year Ended November 30, 2008
In thousands
Net sales P8,400 x 1.05 x 1.10 9,702.00
Less Cost and expenses:
Cost of sales P6,300 x 1.05 x 1.04 6,879.60
Marketing Expenses P780 + 420 1,200.00
Interest expense (P300 x .10 ) = P30 + P140 170.00 8,249.60
Net income before taxes 1,452.40
Income tax at 40% 580.96
Net income after taxes 871.44
7.17
1 Sales 30,000.00
Less, Cost of goods sold 12,000.00
Gross profit 18,000.00
Less, Expenses:
Bad debts P30,000 x 2% 600.00
Depreciation 5,000.00
Other Marketing & Adm. 9,000.00 14,600.00
Net income before taxes 3,400.00
Income tax at 40% 1,360.00
Net income after taxes 2,040.00

2 Collections in July
Month of sale P40,000 x 50% 20,000.00
Month following sale P30,000 x 48% 14,400.00
Total collections 34,400.00

3 Cash disbursements in July

Payment of Accounts Payable
Month of purchases P15,000 x 25% 3,750.00
Following month of purchase
P10,000 x 75% 7,500.00 11,250.00
Income tax 1,360.00
Marketing and administrative 10,000.00
Dividends 15,000.00
Total disbursements 37,610.00

4 Cash balance beginning 5,000.00

Add Collections 34,400.00
Total available 39,400.00
Less Disbursements 37,610.00
Cash balance ending 1,790.00
Required minimum cash balance 5,000.00
Amount to be borrowed 3,210.00
CASH BALANCE ENDING 5,000.00
 7.18
1 Accumulated Depreciation, 12 /31/19 P790,000 + P140,000 930,000.00

2 Retained earnings 12/31/19

Beginning 1,650,000.00
Net income 400,000.00
Dividends paid -
Retained earnings ending 2,050,000.00

3 Accounts receivable 12/31/19 P100,000 + P900,000 - P780,000 220,000.00

4 Payments of accounts payable in 2019 P1,200,000 - P300,000 900,000.00

5 January February March

Sales 60,000.00 80,000.00 90,000.00
Cash receipts from:
Cash sales 30,000.00 40,000.00 45,000.00
Accounts Receivable 49,000.00 36,000.00 43,000.00
Total 79,000.00 76,000.00 88,000.00

7.19
January February March April May June
SALES 300,000.00 400,000.00 550,000.00 925,000.00 725,000.00 475,000.00
CASH BALANCE, BEGINNING 50,000.00 50,000.00 50,000.00 50,000.00 50,000.00 50,000.00
COLLECTIONS:
MONTH OF SALE 20% OF SALES 60,000.00 80,000.00 110,000.00 185,000.00 145,000.00 95,000.00
MONTH AFTER SALE 60% OF SALES 45,000.00 180,000.00 240,000.00 330,000.00 555,000.00 435,000.00
2ND MONTH AFTER SALE 20% OF SALES 10,000.00 15,000.00 60,000.00 80,000.00 110,000.00 185,000.00
TOTAL COLLECTIONS 115,000.00 275,000.00 410,000.00 595,000.00 810,000.00 715,000.00
TOTAL CASH AVAILABLE 165,000.00 325,000.00 460,000.00 645,000.00 860,000.00 765,000.00
LESS, DISBURSEMENTS:
ADMINISTRATIVE SALARIES 25,000.00 25,000.00 25,000.00 25,000.00 25,000.00 25,000.00
LEASE PAYMENTS 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00
MISCELLANEOUS OVERHEAD 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00
QUARTERLY INCOME TAX 125,000.00 125,000.00
CUTTING MACHINE 250,000.00
WAGES AND PRODUCTION 175,000.00 175,000.00 250,000.00 275,000.00 425,000.00 175,000.00
230,000.00 230,000.00 430,000.00 580,000.00 480,000.00 355,000.00
CASH BALANCE ( DEFICIT) (65,000.00) 95,000.00 30,000.00 65,000.00 380,000.00 410,000.00
CASH BALANCE REQUIREMENT 50,000.00 50,000.00 50,000.00 50,000.00 50,000.00 50,000.00
MONTHLY LOAN REQUIREMENT 115,000.00 - 20,000.00 - - -
MONTHLY LOAN PAYMENT 45,000.00 15,000.00
MONTHLY LOAN BALANCE 70,000.00 90,000.00 75,000.00 75,000.00 -
CASH EXCESS - POSSIBLE TEMPORARY INVESTMENTS 255,000.00 360,000.00
The firm's maximum loan requirement is P115,000
The firm's maximum surplus balance is in June which is P360,000.
7.20
1 Breakeven analysis is a method of determining the point at which sales will just cover costs, and it
shows the magnitude of the firm's profits or losses if sales exceed or fall below that point.

Breakeven point in units = P1,770,000 / (P40 - P16) = 73,750.00 units

Breakeven point in pesos = 73,750 units x P40.00 = 2,950,000.00

or P1,770,000 / (P24 / P40.00) = 2,950,000.00

2 Cash breakeven point is the breakeven point when noncash items are subtracted from fixed costs.
cash breakeven point = (P1,770,000 - P360,000) / P24 = 58,750.00 units
58,750 units x P40.00 2,350,000.00

3 Operating leverage is a measure of the extent to which fixed costs are used in a firm's operations.
a firm with a high percentage of fixed costs is said to have a high degree of operating leverage.

Sales 100,000 units x P40.00 4,000,000.00

Less, Variable costs 100,000 x P16 1,600,000.00
Contribution margine 2,400,000.00
Less, fixed costs 1,770,000.00
Net income 630,000.00

operating leverage factory P2,400,000 / P630,000 3.81

or it can be computed as follows

Q(P - V) 100,000.00 x (P40 - P16) 2,400,000.00
Q(P - V) - F 100,000.00 x(P40 - P16)-P1,770,000 630,000.00

= 3.81