KEATING COMPANY 'S SALES BUDGET

APRIL MAY
Budgeted Sales (units) 35,000.00 50,000.00
Selling Price per unit ₱ 20.00 ₱ 20.00
TOTAL SALES ₱ 700,000.00 ₱ 1,000,000.00

Keating Company is preparing budgets for the second quarter ending June 30.
Budgeted sales of the company ‘s only product for the next five months are:

April - 35,000 units May – 50,000 units June – 40,000 units

July – 45,000 units August – 30,000 units

The selling price is P20.00 per unit. Prepare the Sales budget.
 JUNE QUARTER
40,000.00 125,000.00
₱ 20.00 ₱ 20.00
₱ 800,000.00 ₱ 2,500,000.00
KEATING COMPANY 'S CASH RECEIPTS BUDGET

APRIL MAY JUNE

AR - beg bal ₱ 50,000.00 ₱ - ₱ -
April Sales
60% 420,000.00 -
30% - 210,000.00 -
May Sales
60% - 600,000.00 -
30% - - 300,000.00
June Sales
60% - - 480,000.00
Total cash collections 470,000.00 810,000.00 780,000.00

Prepare the Cash Receipts budget if:

All sales are on account
The company collects 60% of these credit sales in the month of the sale; 30% are
collected in the month following sale; and the remaining 10% are uncollectible.
The accounts receivable balance on March 31 was P50,000. All of this balance was
collectible.
 QUARTER
₱ 50,000.00
-
420,000.00
210,000.00
-
600,000.00
300,000.00
-
480,000.00
2,060,000.00
 APRIL MAY JUNE
Budgeted Sales 35,000.00 50,000.00 40,000.00
add Desired ending inventory 10,000.00 8,000.00 9,000.00
Total Needs 45,000.00 58,000.00 49,000.00
less Beginning Inventory (5,000) (10,000) (8,000)
REQUIRED PRODUCTION 40,000.00 48,000.00 41,000.00

Prepare the Production budget if:

The company desires to have inventory on hand at the end of each month equal to 20%
of the following month ‘s budgeted unit sales.
On March 31, 5,000 units were on hand.
JULY
45,000.00
6,000.00
51,000.00
(9,000)
42,000.00
 Required productions in units
Raw Materials per unit (pounds)
Production needs (pounds)
Add Desired ending inventory (pounds)
Total Needs
Less Beginning Inventory
Raw Materials to be purchased (pounds)
Cost of raw materials to be purchased at P1

Prepare the Direct Materials budget if:

5 pounds of material are required per unit of product.
Management desires to have materials on hand at the end of each month equal to 5% of
the following month ‘s production needs.
The beginning materials inventory was 13,000 pounds
The material costs P1.50 per pound.
 APRIL MAY JUNE QUARTER
40,000.00 48,000.00 41,000.00 129,000.00
5 5 5 5
200,000.00 240,000.00 205,000.00 645,000.00
12,000.00 10,250.00 10,500.00 32,750.00
212,000.00 250,250.00 215,500.00 677,750.00
(13,000) (12,000) (10,250) (35,250)
199,000.00 238,250.00 205,250.00 642,500.00
₱ 298,500.00 ₱ 357,375.00 ₱ 307,875.00 ₱ 963,750.00

budget if:
er unit of product.
e end of each month equal to 5% of
ction needs.
was 13,000 pounds
er pound.
JULY
42,000.00
5
210,000.00
AP Beg bal
April Purchases
50%
50%
May Purchases
50%
50%
June Purchases
50%
TOTAL CASH DISBURSEMENT

Prepare the Cash Disbursement budget for Material if:

Half of a month ‘s purchases are paid for in the month of purchase; the other half is pa
No discounts are given for early payment
The accounts payable balance on Mar 31 was P10, 000.0
 APRIL MAY JUNE
10,000.00 - -
- -
149,250.00 - -
- 149,250.00 -

- 178,687.50 -
- - 178,687.50

- - 153,937.50
₱159,250.00 ₱327,937.50 ₱332,625.00

pare the Cash Disbursement budget for Material if:

id for in the month of purchase; the other half is paid for in the following month.
No discounts are given for early payment
ccounts payable balance on Mar 31 was P10, 000.00
QUARTER
10,000.00
-
149,250.00
149,250.00
-
178,687.50
178,687.50
-
153,937.50
₱819,812.50
 APRIL MAY
Units to produced 40,000.00 48,000.00
Direct labor-hr per unit 0.05 0.05
Total hours of DL time needed 2,000.00 2,400.00
DL cost per hr ₱ 10.00 ₱ 10.00
TDL cost ₱ 20,000.00 ₱ 24,000.00

Prepare the Direct Labor budget if:

Each unit produced requires 0.05 hour of direct labor.
Each hour of direct labor costs the company P10
Management fully adjusts the workforce to the workload
each month.
JUNE QUARTER
41,000.00 129,000.00
0.05 0.05
2,050.00 6,450.00
₱ 10.00 ₱ 10.00
₱ 20,500.00 ₱64,500.00
 APRIL
Budgeted DL- hr 2,000.00
multiplVariable Manufacturing Overhead Rate (VMOR) ₱20.00
Variable Manufacturing Overhead (VMO) ₱ 40,000.00
Fixed Manufacturing Overhead (FMO) ₱ 50,500.00
Total Manufacturing Overhead (TMO) ₱ 90,500.00
less Depreciation (₱20,500)
Cash Disbursement for manufacturing Overhead ₱ 70,000.00

Prepare the Manufactu

Variable manufacturing ove
h
Fixed manufacturing overhe
includes P20,500 in depre
out
 MAY JUNE QUARTER
2,400.00 2,050.00 6,450.00
₱20.00 ₱20.00 ₱20.00
₱ 48,000.00 ₱ 41,000.00 ₱ 129,000.00
₱ 50,500.00 ₱ 50,500.00 ₱ 151,500.00
₱ 98,500.00 ₱ 91,500.00 ₱ 280,500.00
(₱20,500) (₱20,500) (₱61,500)
₱78,000.00 ₱71,000.00 ₱ 219,000.00

Prepare the Manufacturing Overhead budget if:

ble manufacturing overhead is P20 per direct labor –
hour
manufacturing overhead is P50,500 per month. This
ludes P20,500 in depreciation, which is not a cash
outflow.
I. Computation of absorption unit product cost

Direct Materials
Direct Labor
Manufacturing Overhead
Unit product cost

NOTE

Predetermined Overhead Rate

II. Budgeted ending finished goods inventory

Ending finished goods inventory in units
multiplyUnit product cost
Ending finished goods inventory in Peso
 Prepare the Ending Finished Goods Inventory Bud
The company uses absorption costing in its budgeted income statem
Manufacturing overhead is applied to units of product on the basi
The company has no work in process inventori
uct cost

Quantity Cost Total

5.00 ₱ 1.50 ₱ 7.50
0.05 ₱ 10.00 ₱ 0.50
0.05 ₱ 43.49 ₱ 2.17
₱ 10.17

Total Manufacturing overhead

= Total direct labor hours

₱ 280,500.00
= 6,450.00

= ₱ 43.49 per hour

ntory
9,000.00 refer to production budget - ending inventory at the end of the qtr
₱ 10.17
₱ 91,569.77 91 530
hed Goods Inventory Budget if:
s budgeted income statement and balance sheet.
ts of product on the basis of direct labor- hours
work in process inventories.
he end of the qtr
MULTIPL

LESS
Budgeted sales in units
Variable selling and administrative expense per unit
Variable selling and administrative expenses
Fixed Selling and Administrative Expense
Total Selling and Administrative Expense
Depreciation
Cash disbursements for Selling and Administrative Expenses

Prepare the Selling and Administrative Expense Budget

Variable selling and administrative expenses are P0.50 per un
Fixed selling and administrative expenses are P70,000 per month, inc
in depreciation.
 APRIL MAY JUNE
35,000.00 50,000.00 40,000.00
₱ 0.50 ₱ 0.50 ₱ 0.50
17,500.00 25,000.00 20,000.00
70,000.00 70,000.00 70,000.00
87,500.00 95,000.00 90,000.00
(10,000) (10,000) (10,000)
Expenses ₱77,500.00 ₱85,000.00 ₱80,000.00

nse Budget if:

P0.50 per unit sold.
r month, including P10,000
QUARTER
125,000.00
₱ 0.50
62,500.00
210,000.00
272,500.00
(30,000)
₱242,500.00
 Cash balance, beginning
ADD Receipts
Cash Collections
Total Cash Available

LESSCash Disbursements
Direct Materials
Direct Labor
Mftg Overhead
Selling and Administrative
Equipment Purchases
Dividends
Total Cash Disburseme

Excess (Deficiency)

Financing
Borrowings
Repayments
Interest
Total Financing

Cash balance, ending

 KEATING COMPANY
CASH BUDGET
FOR THE QUARTER ENDING JUNE 30

APRIL MAY
balance, beginning ₱ 40,000.00 ₱ 188,250.00

Collections 470,000.00 810,000.00

al Cash Available ₱ 510,000.00 ₱ 998,250.00

Disbursements
ct Materials 159,250.00 327,937.50
ct Labor 20,000.00 24,000.00
Overhead 70,000.00 78,000.00
ng and Administrative 77,500.00 85,000.00
pment Purchases - 140,000.00
45,000.00 -
al Cash Disburseme ₱ 371,750.00 ₱ 654,937.50

ss (Deficiency) ₱ 138,250.00 ₱ 343,312.50

owings 50,000 -
ayments - 0
- -
l Financing 50,000 -

h balance, ending ₱ 188,250.00 ₱ 343,312.50

 Prepare the Cash Budget if:
The company borrows P50,000 at the beginning of the quarter and all repayments occur at the end of the quarter with intere
16% per year.
The company desires a cash balance of at least P30,000 at the end of each month. The cash balance at the beginning of Ap
P40,000.
Cash dividends of P45,000 are to be paid to stockholders in April.
Equipment purchases of P140,000 are scheduled for May and P48,000 for June, depreciation charges will commence
Y

G JUNE 30

JUNE QUARTER
₱ 343,312.50 ₱ 40,000.00

780,000.00 2,060,000.00
₱ 1,123,312.50 ₱ 2,100,000.00

332,625.00 819,812.50
20,500.00 64,500.00
71,000.00 219,000.00
80,000.00 242,500.00
48,000.00 188,000.00
- 45,000.00
₱ 552,125.00 ₱ 1,578,812.50

₱ 571,187.50 ₱ 521,187.50

- 50,000
(50,000) (50,000)
(2,000) (2,000)
(52,000) (2,000)

₱ 519,187.50 ₱ 519,187.50
ur at the end of the quarter with interest rate of

he cash balance at the beginning of April was

lders in April.
e, depreciation charges will commence.
 KEATING COMPANY
INCOME STATEMENT
FOR THE QUARTER ENDING JUNE 30

LESS

LESS

LESS

Computation of Net Sales

LESS

Computation of Cost of Goods Sold

MULTIPLY
 KEATING COMPANY
INCOME STATEMENT
HE QUARTER ENDING JUNE 30

Net Sales ₱2,250,000.00

Cost of Goods Sold (1,271,802.33)
Gross Margin ₱ 978,197.67
Selling & Administrative Expens (242,500)
Net Operating Income ₱ 735,697.67
Interest Expense (2,000)
Net Income ₱733,697.67

Sales ₱2,500,000.00
Uncollectible Amounts (10%) (₱250,000)
Net Sales ₱2,250,000.00

ods Sold
Budgeted Sales (units) 125,000.00
Unit Product Cost ₱ 10.17
Cost of Goods Sold 1,271,802.33
Current Assets
Cash
Accounts Receivable
Raw Materials Inventory
Finished goods Inventory
Total Current Assets

Noncurrent Assets
Land
Buildings and Equipment
Accumulated Depreciation
Total Noncurrent Assers

TOTAL ASSETS
 KEATING COMPANY
BALANCE SHEET
31-Mar

₱ 40,000.00
50,000.00
5,000.00
entory 15,000.00
110,000.00

550,000.00
pment 2,000,000.00
eciation 400,000.00
t Assers 2,150,000.00

₱ 2,260,000.00
Liabilities
Accounts Payable ₱ 10,000.00

Keating 's Equity

Common Stock 1,050,000.00
Retained Earnings 1,200,000.00

TOTAL LIABILITY & EQUITY ₱ 2,260,000.00

 KEATING COMPANY
BALANCE SHEET
30-Jun

Current Assets
Cash 519,187.50
Accounts Receivable 240,000.00
Raw Materials Inventory 49,125.00
Finished goods Inventory 91,569.77
Total Current Assets ₱ 899,882.27

Noncurrent Assets
Land 550,000.00
Buildings and Equipment 2,188,000.00
Accumulated Depreciation 491,500.00
Total Noncurrent Asser ₱ 2,246,500.00

TOTAL ASSETS ₱ 3,146,382.27

Liabilities
Accounts Payable ₱ 153,937.50

Keating 's Equity

Common Stock 1,103,747.10
Retained Earnings 1,888,697.67

TOTAL LIABILITY & EQUITY ₱ 3,146,382.27