Activity on Short Term Budgeting PDF

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STRATEGIC COST MANAGEMENT Activity on Short Term Budgeting Problem 1 The Futuristic Company made some projections of their incoming sales for the subsequent year of their operations. Thus, they want to make sets of budget schedules in order to support their sales projection and prepare for any necessary resources such as cash and inventories. The sales projections in units for the year 2021 are as follows: --------------------------------2021------------------------------2022 Economy Q1 Q2 Q3 Q4 Q1 Probability Good 84,000 79,000 88,000 92,000 89,000 25% Normal 63,000 60,000 71,000 82,000 77,500 50% Bad 45,000 38,000 49,000 56,000 52,500 25% Other information  The economy has stable market flow but still vulnerable to some changes.  The product is sold at a price of 90.00 per unit.  The company policy towards its sales are all made on account.  The collection pattern of the accounts are as follows: 50% of the total sales made within the quarter availing the 2% discount; 30% on the first following quarter; 19% on the second following quarter and the remaining is estimated to be uncollectable.  The sales made on 3 rd quarter and 4 th quarter of year 2020 are 65,000 and 67,500 units respectively  Finished Inventory end is 10% of the subsequent quarter sales  The product needed 5pcs of raw materials which its policy maintains raw materials inventory end of 20% of the next quarter sales requirement.  The raw materials are purchased 3.50 pesos each.  The payment on the purchase of materials are made as follows: 60% on the same month availing the discount of 1%; the remaining are paid on the subsequent quarter  The product requires 20 mins of labor. The hourly rate is at 60 pesos.  The factory overhead is at 80% of direct labor cost  The direct labor and factory overhead are paid within the month  The operating expenses for the 4 quarters are as follows: 1,100,000; 975,000, 1,125,000, & 1,255,000  The operating expenses are paid within the month.  The income tax rate is at 30%  If there is shortage of cash within the quarter, the company borrows money in a multiple of 5,000 to achieve its maintaining balance of 50,000. The terms of borrowing the money is at 12%. Assume that the money is borrowed at the end of the quarter and paid at the subsequent quarter.  The beginning cash balance for the year 2021 is at 112,000. Required: Make the following budget schedules 1. Sales schedule 2. Collection schedule 3. Production schedules 4. Purchase schedule 5. Payment schedule

6. Labor Schedule 7. Factory overhead schedule 8. Cost of goods sold statement 9. Income statement 10. Cash Budget...