AE 24 Module 1 Activities on the Preparation of Master Budget and Cash Budget PDF

Preview

Summary

Module 1 – BUDGETINGActivity 1-Budgeted sales for JJ Corporation for July to October 2022 are as follows:Month Unit Sales July 20, August 35, September 25, October 30,Sales price per unit is P Plans are to have an inventory of finished product equal to 20 percent of the unit sales for the next month...

Description

Module 1 – BUDGETING Activity 1-1 Budgeted sales for JJ Corporation for July to October 2022 are as follows: Month July August September October

Unit Sales 20,000 35,000 25,000 30,000

Sales price per unit is P180 Plans are to have an inventory of finished product equal to 20 percent of the unit sales for the next month. There was 4,000 units in beginning inventory on July 1st. Three pounds of materials are required for each unit produced. Each pound of material costs P20. Inventory levels for materials equal 30 percent of the needs for the next month. Desired ending inventory for September is 25,200 pounds of material. Beginning inventory for July was 20,700 pounds of material. Each unit requires .6 hours of direct labor and the average wage rate is P16 per hour. Variable overhead rate is P3.50 per direct labor hour. There is also fixed overhead of P22,000 per month. The company pays a 3% commission on sales Company has fixed selling and administrative expenses as follows: Rent P6,000/month Utilities 1,200/month Advertising 400/month Office Salaries 35,000/month Required: A. Prepare a sales budget for July, August, and September and in total for the quarter. B. Prepare production budgets for July, August, and September and in total for the quarter. C. Prepare a direct materials purchases budget in pounds and dollars for July, August, and September and in total for the quarter. D. Prepare a direct labor budget in hours and total cost for July, August and September and in total for the quarter. E. Prepare an overhead budget for July, August and September and in total for the quarter. F. Prepare a selling and administrative expenses budget for July, August and September and in total for the quarter. G. Prepare an ending finished goods inventory budget for the quarter (Hint: you have already calculated the desired ending finished goods inventory amount and assume a stable per unit rate) H. Prepare a cost of goods sold budget for the quarter I. Prepare a budged income statement for the quarter-the company falls into the 35 percent tax bracket for income taxes.

Activity 1-2 FF Company usually sells about 20 percent of its merchandise during a month for cash with the remaining sales on account. The company's accounts receivable payment history is as follows: 30 percent in the month of sale, 50 percent in the month following, and 15 percent in the second month following sale. Total budgeted sales for the second quarter are as follows: April May June

P100,000 120,000 80,000

Assume all questions relate to the month of June. A. B. C. D. E.

What are the expected cash sales? What are the expected receipts from accounts receivable for sales made in April? What are the expected receipts from accounts receivable for sales made in May? What are the total expected cash receipts? From the above accounts receivable history information, receipts from accounts receivable do not equal 100 percent Why not? Does this amount appear on the cash budget?...