FM 5 FORMULA 2.

ENDING FINISHED GOODS INVENTORY

SALE BUDGET
Desire Ending Inventory
Units x Unit cost
X: unit selling price Total ending inventory cost
Budgeted Sales in pesos
COST OF GOOD SOLD BUDGET
PRODUCTION BUDGET
Expected F/G, beginning Inventory
ADD: Budgeted cogs manufactured
Budgeted Sales (units)
Cost of goods available sale
ADD: Desired Ending Inventory
LESS: Desired finished goods, ending inventory
Total Needed
BUDGETED COST GOODS SOLD
LESS: Beginning Inventory
Units to be produced
Note: to get the budgeted cogs multiply the total
unit cost to units to be produced.
DIRECT MATERIALS BUDGET
Note: to get the expected finished beg. Inventory
Units to be produced (P/B)
multiply the beginning inventory to total unit cost
x Direct Material per unit
ADD: Desired Ending Invetory
SELLING AND ADMINISTRATIVE BUDGET
Total needed
LESS: Beginning Invetory
Budgeted sales in units
DM to be purchase
x Variable S&AE per unit
x Cost per (units)
Total variable expenses
Total DM purchase cost
note: add the two dm purchase (materials)
Fixed Selling and Admin Exp
Total Fixed Expenses
DIRECT LABOR BUDGET
Total Selling and Administrative Expense Budget
Units to be produced (P/B)
x Direct Labor hrs needed per unit
Note: to get the total sa&ae add the total variable
Budgeted Direct Labor hours
expenses and total fixed expenses
x Direct Labor rate per hour
Budgeted Direct Labor cost
INCOME STATEMENT
OVERHEAD BUDGET
SALES
LESS: COST OF GOODS SOLD
Budgeted Direct Labor hrs
GROSS PROFIT
x Variable overhead rate
LESS: SELLING AND AD EXPENSES
Budgeted variable overhead
OPERATING INCOME BEFORE TAXES
ADD: Budgeted Fixed overhead
LESS: INCOME TAX
Total Budgeted Factory Overhead
NET INCOME

CASH COLLECTIONS ON ACCOUNTS RECEIVABLE

ENDING FINISHED GOODS INVENTORY BUDGET
Sales budget in pesos
1. Calculate the unit production cost
x % cash sales
Budgeted Cash sales
 Direct Material
Ex: pcs*ounces
Sales budget in pesos
 Direct Labor
x % credit sales or on account
Ex: hr*rate per hour
Accounts Receivable Balances
 Factory Overhead
Ex: variable overhead rate*hr
Ex: fixed overhead*hr
DM+DL+FO = Tota Unit Cost
To get the Fixed overhead just divide the
BUDGETED FIXED OVERHEAD/DIRECT LABOR

CASH PAYMENTS ON ACCOUNTS PAYABLE

CASH BUDGET

Cash balance beginning

CASH RECEIPTS:
ADD: Cash sales and collection on account
Total cash receipts available.
Less: CASH DISBURSEMENTS:
Payment of accounts payable
Direct labor
Factory overhead
Selling and Administrative Exp.
Income taxes
Equipment
Total Cash disbursements
Excess (deficiency) of cash disbursements
over receipts

Financing
Borrowings
Repayments
Interest Expense
Total Financing
Cash Balance END