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Chapter 7 Financial PlanningAnswer KeyTRUE OR FALSE 1 TRUE 11 FALSE 21 FALSE 2 TRUE 12 TRUE 22 TRUE 3 FALSE 13 TRUE 23 FALSE 4 FALSE 14 TRUE 24 FALSE 5 FALSE 15 TRUE 25 FALSE 6 FALSE 16 FALSE 26 TRUE 7 TRUE 17 TRUE 27 TRUE 8 FALSE 18 TRUE 28 FALSE 9 FALSE 19 TRUE 29 TRUE 10 TRUE 20 TRUE 30 FALSEMULT...

Description

Chapter 7 Financial Planning Answer Key TRUE OR FALSE 1 TRUE 2 TRUE 3 FALSE 4 FALSE 5 FALSE 6 FALSE 7 TRUE 8 FALSE 9 FALSE 10 TRUE

11 12 13 14 15 16 17 18 19 20

FALSE TRUE TRUE TRUE TRUE FALSE TRUE TRUE TRUE TRUE

21 22 23 24 25 26 27 28 29 30

FALSE TRUE FALSE FALSE FALSE TRUE TRUE FALSE TRUE FALSE

MULTIPLE CHOICE QUESTIONS 1 2 3 4 5 6 7

D B D A B B D

8 9 10 11 12 13 14

A D A C C D A

MULTIPLE CHOICE PROBLEMS 1 D P140.000

15 16 17 18 19 20 21

D D C A B D D

22 23 24 25 26

B C D C D

AR from April Sales is equal to 15% balance April total sales = P21,000 / 15% =

2

B

140,000.00

March sales = P31,000 / 30% =

100,000.00

April sales = P33,000 / 30% =

110,000.00

Difference 3

C

10,000.00

9,000 units

May

June

Sales

5,000

4,000

+

Ending inventory

1,600

3,600

=

Total

6,600

7,600

-

Beginning inventory

2,000

1,600

=

Production

4,600

6,000

1 EI in May = 4,000 x 40% =

1,600

2 BI in May = 5,000 x 40% =

2,000

July 9,000

-

3 If june production is 6,000, budgeted EI in June is P3,600, as the balancing figure in June, therefore, sales in July is P3,600 / 40% = P9,000

4

B

4,250 units

FG Ending inventory = 40% of next month sales 1 card table = 3 hours at P13 per DLH ; direct labor cost = P136,500 Direct labor hours used = P P136,500 / P13 =

10, 500 hours

Production = 10,500 hrs / 3 hours per table = 3,500 card tables +

6

D

C

3,000 1,700 (40% of July sales ) *

=

Total

4,700

=

Beginning inventory Production

1,200 (40% of June sales) 3,500

*

5

Sales Ending inventory

25,700 units

(40% of July sales = 1,700 / 40%) = 4,250

Sales

25,000

+

Ending inventory

=

Total

28,200

-

Beginning inventory

2,500 (10% x 25,000)

=

Production

408,000 lbs

3,200 (10% x 32,000)

25,700

1 unit of Product X = 2lbs of raw materials Required production lbs per unit

200,000 2

Raw materials used

400,000

Required Ending inventory

10,000

Total Available for use

410,000

Required Beginning inventory

2,000

Purchases 7

8

C

B

P15,000

408,000

Sales commission P5 x 1,000 =

P163,800 +

5,000.00

Administrative

10,000.00

Total

15,000.00

Sales

5,000

Ending inventory

1,200 40% of June = 3,000 x 40% = 1,200

=

Total

6,200

=

Beginning inventory Production

2,000 40% of May = 5,000 x 40% = 2,000 4,200

hours required per unit total hours used rate per hour Direct labor cost

3 12,600 13.00 163,800

9

C

P148.600

From june sales = P150,000 x 70% =

105,000.00

From May sales ( P48,000 / 30% ) x 15% =

24,000.00

Fro, April Sales (P21,000 / 15% ) x 14% =

10

A

P1,090,000

19,600.00

Total collections in June

148,600.00

Beginning cash balance Collections

50,000.00 1,000,000.00

Borrowings

70,000.00

Total cash available

1,120,000.00

Ending cash balance

30,000.00

Disbursements 11

D

P100,000

1,090,000.00

April 1 cash balance

23,000.00

Collections

876,000.00

Total available

899,000.00

Disbursements

978,000.00

Deficiency

(79,000.00)

Required minimum balance

20,000.00

Required borrowing Borrowings at multiples of P1,000 = P100,000 12

A

P1,632,000

(99,000.00) 100,000.00

Mark up at 25%, therefore, sales = 1.25% June sales = P2,040,000 = 1.25%

13

C

P1,767,200

Cost of sales P2,040,000 / 1.25% =

1,632,000.00

July sales = P2,170,000 / 1.25% =

1,736,000.00

Req. EI = (P2,300,000 /1.25%) x 30% =

552,000.00

Total

2,288,000.00

Req. BI = (1,736,000 x 30%)

520,800.00

Required Purchases

14

A

P14,250

1,767,200.00

From September sales

P15,000 x 20% =

From August sales

P10,000

From July sales

P25,000 x 25% =

x 50%

Total collections in september 15

16

B

D

P4,600

P4,400

October purchases

P4,000 x 40% =

3,000.00 =

5,000.00 6,250.00 14,250.00 1,600.00

September purchases P5,000 x 60% = Total disbursed to suppliers in October

3,000.00 4,600.00

November purchases

P5,000 x 40% =

2,000.00

October purchases

P4,000 x 60% =

Total disbursed to suppliers in November

2,400.00 4,400.00

17

C

P16,290

December sales

P17,500 x 60% x 98% =

November sales

P15,000 x 40%

6,000.00

Total collections in December under the new plan 18

B

500 lbs

Production = 1,000 x 2 lbs = Ending inventory (1,200 x 2 x .25)

2,000 600

Total

2,600 500

(1,000 x 2 x .25)

Purchases 19

B

700 lbs

at march sales = 1,400 x 2 x 25% =

20

C

2,100 lbs

refer to solutions in Number 18

21

A

2,400 lbs

February production 1,200 x 2 =

21

A

P801,400

# 20

2,400

July Collections include: 63,000.00

with disc June sales billed july 10, .80 x .50 x P800,000 x .98 w/o disc June sales billed june 20, .18 x .50 x P800,000

313,600.00 72,000.00

with disc July sales billed July 20, .80 x .5 x P900,000 x .98 Total P433,800

2,100 700

w/o disc May sales billed june 10, .18 x .50 x P700,000

B

16,290.00

2 lbs = 1 unit

Beginning inventory

22

10,290.00

352,800.00 801,400.00

September collections from August Sales: August sales billed Sept. 10, .80 x .50 x P900,000 x .98 August sales billed August 20, .18 x .50 x P900,000

352,800.00 81,000.00

Total

433,800.00

23

D

P120,000

.80 x .25 x P600,000

120,000.00

24

D

P660,000

Ending inventory, .80 x .25 x next month's sales, P900,00 Merchandise needed this month .80 x P800,000

180,000.00 640,000.00

Total needed

820,000.00

25

C

Beginning inventory, .80 x .25 x P800,000

160,000.00

Purchases

660,000.00

P690,000

July

August

Ending inventory

180,000.00

120,000.00

Current COS

720,000.00

720,000.00

Total needed

900,000.00

840,000.00

Beginning inventory

180,000.00

180,000.00

Purchases

720,000.00

660,000.00

Payments, 1/2 of current purchases 1/2 preceding months Total payments

360,000.00 330,000.00 690,000.00

26

A

borrow P32,000

Cash balance beginning Add, collections

15,000.00 90,000.00

Total Less, disbursements

105,000.00 (125,000.00)

Balance Required ending balance

(20,000.00) 12,000.00

Required borrowings 27

28

C

A

44,000 units

32,000.00 may

june

budgeted sales desired ending inventory

30,000.00 8,000.00

april

40,000.00 12,000.00

60,000.00

total requirements desired beginning invento required production

38,000.00 6,000.00 32,000.00

52,000.00 8,000.00 44,000.00

105,000 units required production material X per unit total requirements desired ending inventory

29

A

P60,500

april 32,000.00

may 44,000.00

x 3 lbs. 96,000.00

x 3 lbs. 132,000.00

33,000.00

(132,000 x 25%

total requirements desired beginning inventory

129,000.00 24,000.00

(96,000 x 25%

required production

105,000.00

September sa(P60,000 x 30%) August sales (P70,000 x 50%)

18,000.00 35,000.00

July sales

(P50,000 x 15%)

7,500.00 60,500.00

P12,000 x 30% P5,000 x 70%

30

B

P7,100

March February

3,600.00 3,500.00 7,100.00

31

C

P21,100

Paid to suppliers labor cost P20,000 x 15% other operating costs (P15,000 - P4,000)

7,100.00 3,000.00 11,000.00 21,100.00

32

D

P14,000

March sales P20,000 x 40% February saleP10,000 x 60%

8,000.00 6,000.00 14,000.00

33

A

P2,900

34

C

13,838

35

D

Cash balance beginning Add, collections in March Less, payments in March Balance Required minimum balance Amount borrowed Cash balance ending ( P6,500 -3,600)

3,500.00 14,000.00 (21,100.00) (3,600.00) 2,500.00 6,500.00 2,900.00

Total production 30,000 x 4 months Less January sales February sale25,000 x 1.04 March sales 26,000 x 1.04 April sales 27,040 x 1.04 Number of units on hand in April

450,000 units

120,000 25,000 26,000 27,040 28,122

106,162 13,838

480,000 + 50,000 - 80,000 = 450,000

PROBLEMS 7.1

April sales May sales

P200,000 x 8% = P420,000 x 50% =

16,000.00 210,000.00

June sales

P350,000 x 40% =

140,000.00

Total collections in June

366,000.00

7.2

Product A January Required EI

Product B

February

2,250

January

Product C

February

January

February

2,750

3,000

2,500

2,000

2,500

Projected sales

10,000

9,000

11,000

12,000

12,000

8,000

Total production

12,250

11,750

14,000

14,500

14,000

10,500

Required BI

(2,500)

(2,250)

(2,750)

(3,000)

(3,000)

(2,000)

9,750

9,500

11,250

11,500

11,000

8,500

Budgeted production

Material X Purchases Product A January Production

January

Product C

February

January

9,750

9,500

11,250

11,500

2

2

2

2

19,500

19,000

22,500

x lbs required per unit Total used

Product B

February

23,000

33,000

Required EI (19,000 + 23,000 + 25,500) x .50 =

33,750.00 75,000.00 108,750.00

Less, Required BI ( 75,000 x .50) =

37,500.00

Materials X to be purchased in January, in lbs

71,250.00

x Cost per lb of Material X Budgeted Cost of Material X for January

8,500

3

Required in prodution for january (19,500 + 22,500 + 33,000 ) = Total raw materials X required

February

11,000

4.00 285,000.00

25,500

Material Y Purchases Product A January Production

January

Product C

February

January

9,750

9,500

11,250

11,500

3

3

1

1

29,250

28,500

11,250

x lbs required per unit Total used

Product B

February

11,500

February

11,000 22,000

Required EI (28,500 + 11,500 + 17,000) x .50 =

28,500.00

Required in prodution for january (29,250 + 11,250 + 22,000 ) =

62,500.00

Total raw materials Y required

91,000.00

Less, Required BI ( 62,500 x .50) =

31,250.00

Materials Y to be purchased in January, in lbs

59,750.00

x Cost per lb of Material Y

8,500

2 17,000

3.00

Budgeted Cost of Material Y for January

179,250.00 Material Z Purchases

Product A January Production

January

Product C

February

January

9,750

9,500

11,250

11,500

2

2

2

2

19,500

19,000

22,500

x lbs required per unit Total used

Product B

February

23,000

11,000 22,000 29,500.00

Required in prodution for january (19,500 + 22,500 + 22,000 ) =

64,000.00

Total raw materials Z required

93,500.00

Less, Required BI ( 64,000 x .50) =

32,000.00

Materials Z to be purchased in January, in lbs

61,500.00

Budgeted Cost of Material Z for January Total budgeted cost of purchases of all raw materials for the month of January

5.00 307,500.00 771,750.00

7.3 Revenues

100,000.00

Less, Cost of goods sold

65,000.00

Gross Margin

35,000.00

Less. General & Administrative expenses

30,000.00

Net income before taxes

8,500

2

Required EI (19,000 + 23,000 + 17,000) x .50 =

x Cost per lb of Material Z

February

5,000.00

Income tax at 40% rate

2,000.00

Net income after tax

3,000.00

17,000

*

Cost of goods sold schedule Raw materiasl used (production budget)

15,000.00

Direct labor costs (labor budget)

20,000.00

Manufacturing overhead (overhead budget) Total current manufacturing costs

20,000.00 55,000.00

Add, Work in progress beginning

10,000.00

Total in process

65,000.00

Less, Work in progress ending

7.4

5,000.00

Total cost of goods manufactured

60,000.00

Add, Finished goods beginning

15,000.00

Total available for sales

75,000.00

Less, Finished goods ending

10,000.00

Cost of goods sold

65,000.00

Cash receipts: From the month of sale - June From a month after sale - May

P85,000 x 70% P90,000 x 20%

From 2 months after sale - April

P80,000 x 10%

59,500.00 18,000.00 8,000.00

Total

85,500.00

Cash Disbursements: Purchases from May with discount

P40,000 x 98%

39,200.00

Operating expenses

5,000.00

Total

44,200.00

Net change in cash for June - increase 7.5 a

41,300.00

Actual of 2018 November December 80,000.00 90,000.00

Sales Purchases

70,000.00

80,000.00

January 70,000.00

Budgeted of 2019 February March 90,000.00 30,000.00

70,000.00

60,000.00

50,000.00

4,500.00

2,600.00

300.00

From current months sales 40% of sales From prior month sales 60% balance

28,000.00 54,000.00

36,000.00 42,000.00

12,000.00 54,000.00

Total collections

82,000.00

78,000.00

66,000.00

86,500.00

80,600.00

66,300.00

Beginning cash balance Cash receipts:

Cash available Cash disbursements: From purchases: From current month 20% of purchase

14,000.00

12,000.00

10,000.00

From 1 month after purchase 50% of purchase

40,000.00

35,000.00

30,000.00

From 2 months after purchae 30% of purchase Total payments for purchase

21,000.00 75,000.00

24,000.00 71,000.00

21,000.00 61,000.00

Labor expenses

4,000.00

4,000.00

4,000.00

Sales salaries

2,000.00

2,000.00

2,000.00

Commissions at 2% of current months sales

1,400.00

1,800.00

600.00

Other expenses excluding depreciation of P500

1,500.00

1,500.00

1,500.00

83,900.00

80,300.00

69,100.00

2,600.00

300.00

(2,800.00)

Total cash disbursements Ending cash balance b

Invest in January and February; Borrow for March

7.6 june

july

august

Sales budget Credit sales

30%

120,000.00

132,000.00

150,000.00

Cash sales

70%

...