POLYTECHNIC UNIVERSITY OF THE PHILS

FINANCIAL MANAGEMENT
QUIZ ON FINANCIAL PLANNING

1. The Lucky Inc started its commercial operations on September 30 of the current year.
Projected manufacturing costs for the first three months of operations are P1,568,000,
P1,952,000, and P2,176,000, respectively. Depreciation, insurance, and property taxes
represent P288,000 of the estimated manufacturing costs. Insurance was paid on September
30, and property taxes will be paid in July next year. Seventy-five percent of the remainder of
the manufacturing costs are expected to be paid in the month in which they are incurred, with
the balance to be paid in the following month.

Compute the cash payments for manufacturing costs in the months of October, November
and December.

2. The Professional Company manufactures a single product. It keeps its inventory of finished
goods at twice the coming month’s budgeted sales, inventory of raw materials at 150% of
the coming month’s budgeted production requirements. Each unit of product requires two
pounds of materials. The production budgets in units consist of the following:.
May 1,000
June 1,200
July 1,300
August 1,600
Compute the raw material purchases for May and June.

3. Junk Dealer Inc has the following historical pattern on its credit sales.70 percent collected in
the month of sale; 15 percent collected in the first month after sale; 10 percent collected in
the second month after sale; 4 percent collected in the third month after sale; 2 percent
uncollectible. The sales on open account have been budgeted for the last six months of 2022 are
as follows: July – Php60,000; August – Php70,000; September – Php80,000; October – Php90,000;
November – Php100,000; December – Php85,000.

Compute the estimated total cash collections during the months of July, August, September, October,
November and December.