NAME:___________________________________ SECTION:______ XINTEGMAS – MODULE 05

EXERCISE 01: ESPASOL Company has just prepared its master budget for the year 200B. Some of the information used in the
preparation of such budget is as follows:
1. Budgeted sales: January P480,000
February 520,000
March 560,000
April 500,000
May 576,000
June 640,000
2. Twenty percent of total sales is cash sales. The collections pattern for the sales on credit is as follows:
30% in the month of sale
40% in the month after the month of sale
25% in the second month after the month of sale
3. ESPASOL Company's gross margin rate is 60% of sales.
4. Accounts payable arising from merchandise purchases is paid for in the month following the purchase.
5. The company desires an inventory at the end of each month equal to 30% of the next month's sales in units.
6. The variable operating expenses (other than cost of goods sold) are 10% of sales and are paid for in the month following
the sale.
7. The annual fixed operating expenses are as follows:
Depreciation P336,000
Advertising 576,000
Insurance 144,000
Salaries 864,000
Property taxes 192,000
8. All of the fixed operating expenses are incurred uniformly throughout the year. Cash fixed operating expenses are paid
in the month of incurrence, except for:
Insurance - paid quarterly in January, April, and July
Property taxes - paid twice a year in April and October
REQUIRED:
1. Budgeted cash collections in March for the sales made in March.
2. Budgeted cash receipts for the month of April.
3. Budgeted purchases of merchandise for February.
4. Budgeted cash disbursements for operating expenses (other than cost of goods sold) during the month of April.
5. Budgeted cash disbursements to be made in April for merchandise purchases.
6. Assume that the expected cash balance at the beginning of April is P51,600. How much is the budgeted cash balance as
of April 30?

EXERCISE 02: The following information has been gathered by the Budget Director of the KARITON COMPANY, another outfit
managed by the LAKALAK COMPANY. The firm manufactures and sells only one product. The selling price during the coming month
is expected to be the prevailing price of P6 per unit. Expected sales during the month is a total of 80,000 units of finished goods.
Finished goods expected to be on hand at the end of the month total 50,000 units. Finished goods expected to be on hand at the
beginning of the month total 42,000 units.

Direct labor cost is P3.00 per hour. 0.3 hour of direct labor is required to manufacture each unit of finished product. Factory
overhead is applied to work-in-process based on direct labor hours. Variable factory expenses at the planned level of operations
are expected to amount to P33,000; fixed overhead is expected to amount to P99,000.

The raw materials expected to be on hand at the beginning of the month total 5,000 gallons. Only one kind of raw material is used
to produce the finished goods. 1.75 gallons of raw materials are needed to manufacture each unit of finished product. Raw
materials are expected to cost P0.20 per gallon during the coming month, its prevailing cost. Raw materials expected to be on
hand at the end of the month total 8,000 gallons.

Variable administrative and selling expenses is P1.25 per unit. In assisting the company to formulate the budget, you determined
the following budget parameters:

REQUIRED:
7. The total expected peso sales.
8. Finished goods in units to be produced during the month.
9. Budgeted cost of raw materials to be used in production.
10. Budgeted raw materials purchases cost.
11. Budgeted direct labor cost.
12. Variable overhead cost per direct labor hour.
13. Fixed overhead cost per direct labor hour.
14. Budgeted contribution margin.
15. Budgeted cost of goods sold (full cost).
16. Net profit before tax.