1.

Which of the following objectives is not a primary purpose of expected, thereby developing a sense of commitment to achieve
preparing a budget? established goals.
A. make sure the company expands its operations. 3. Provides yardstick to evaluate actual performance; encouraging
B. To control income and expenditure in a given period. efficiency, increasing
C. To provide a basis for comparison of actual performance output and reducing cost.
D. To communicate the company’s plans throughout the entire 4. Provides a sense of direction for the company and enhances
business organization coordination of business
2. For better management acceptance, the flow of data to be used for activity.
budgeting should begin 5. Eliminates or takes over the role of administration by providing
with detailed information that
A. Accounting department C. Lower levels of management allows executives to operate toward achievement of the
B. Budget committee D. Top management organization’s objectives.
3. Ineffective budgets and/or control systems are characterized by A.Statements 1, 2, 3, and 4 only. C.Statements 3, 4, and 5 only.
the use of B.Statements 1, 3, and 4 only. D.All five statements.
A. budgets for motivation. 6. These statements are proper to the budgeting process except:
B. budgets for coordination. A.It is a tool to orchestrate the various functions of operations in a
C. the budget for communication. business.
D. budgets as a planning tool only and disregarding them for control B.It is a part of management’s responsibility to plan the use of its
purposes. resources.
4. Budget slack is a condition in which C.Actual results need not be compared with plan, since the process
A. demand is low at various times of the year. ends after budget is
B. managers grant favored employees extra time off. approved.
C .excess machine capacity exists in some areas of the plant. D.The involvement of the various levels of individuals in the
D. there is an intentional overestimate of expenses or an company is necessary to gain its
underestimate of revenues. acceptance and attain its goals.
5. Which of these statements are advantages of profit planning? 7. In budgeting, which of the following statements is false?
1. Develops profit-mindedness, encourages cost consciousness and A.Planning and control are the essential features of the budgeting
resources utilization process
throughout the company. B.Capital expenditures budget shows the availability of idle cash for
2. Provides vehicle to communicate objectives, gain support for the investment
plan, of what is C.Budgeting provides a measuring device to which subsequent
performances are compared
and evaluated. 13.Just-in-time manufacturers are more likely than conventional
D.Budget preparation is not the sole responsibility of any one manufacturers to
department and is prepared by A.Experience cash shortages.
combining the efforts of many individuals B.Prepare production budgets without a sales forecast.
Budget methodologies C.Budget materials purchases equal to the current month’s needs for
8. A budget that includes a 12-month planning period at all times is production.
called a __________ budget. D.Budget unit production for the month at greater than budgeted
A.continuous C.master unit sales for the month.
B.flexible D.pro forma 14.A systematized approach known as zero-based budgeting (ZBB)
9. Budgeting expenditures by purpose is called A.Commences with the current level of spending.
A.Flexible budgeting. C.Program budgeting. B.Presents planned activities for a period of time but does not
B.Line budgeting. D.Zero-based budgeting present a firm commitment.
C.Divides the activities of individual responsibility centers into a
10..A budget that identifies revenues and costs with an individual series of packages that are
controlling their incurrence is prioritized.
A.Master budget C.Responsibility budget D.Classifies the budget by the prior year’s activity and estimates the
B.Product budget D.None of the above benefits arising from
11.The procedure for setting profit objectives in which management each activity.
specifies a given rate of 15.This budgeting system places the burden of proof on the manager
return that it seeks to realize in the long run by means of planning to justify authority to spend
toward that end is the: any money whether or not there was spending in the previous
A.a posteriori method D.pragmatic method period. Different ways of
B.a priori method E.theoretical method performing the same activity and different levels of effort for the
C.ad hoc method activity is evaluated. This
12.Activity-based budgeting includes all the following steps system is called
EXCEPT A.Budgeting by alternatives. C.Scenario budgeting.
A.computing the cost of performing activities. B.Budgeting by responsibility and authority.D.Zero-based
B.determining a separate cost-driver rate for each department. budgeting.
C.determining demands for activities from sales and production 16.In zero-based budgeting, which of the following statements are
targets. True?
D.describing the budget as costs of activities rather than costs of 1. All activities in the company are organized into break-up units
functions. called packages.
2. All costs have to be justified every budgeting period. 19.A budget that is expressed in units of materials, number of
3. The process is not time consuming since justification of costs can employees, or number of man-
be done as a routine hours or service units rather than in pesos is known as
matter. A.Physical budget C.Progressive budget
A.Statement 1 only. C.Statement 2 and 3 only. B.Planning budget D.Traditional budget
B.Statements 1 and 2 only. D.All three statements. 20.Which of the following is LEAST likely to be affected if unit
17.Considering budgeting concepts and principles, which of the sales for this month are lower than
following statements is not budgeted?
applicable? A.Cash receipts for next month. C.Production for next month.
A.The flexible budget is often used as a basis for preparing the pre- B.Inventory at the end of this month. D.Production for this month.
determined overhead 21.If a company has a policy of maintaining an inventory of finished
rate. goods at a specified
B.A flexible budget is geared toward a range of activity rather than percentage of the next month's budgeted sales, budgeted production
toward a single level of for January will exceed
activity. budgeted sales for January when budgeted
C.Although it is effective in measuring production control, a static A.January sales exceed budgeted February sales.
budget is not effective in B.February sales exceed budgeted January sales.
measuring cost control. C.January sales exceed budgeted December sales.
D.The only difference between a flexible budget and a static budget D.December sales exceed budgeted January sales.
is that a flexible budget 22.A company that maintains a raw material inventory, which is
does not contain fixed costs. based on the following month's
Annual profit plan & supporting schedules production needs, will purchase less material than it uses in a month
18.For a company that does not have resource limitations in what where
sequence would the budgets be A.sales exceed production.
prepared? B.production exceeds sales.
1. cash budget 4. production budgets C.planned production exceeds the next month's planned production.
2. sales budget 5. purchase budgets D.planned production is less than the next month's planned
3. inventory budget production.
23.Which of the following is most likely to result if X’s managers
sequence 2, 3, 4,1 and 5 C.sequence 2, 4, 3, 5 and 1 decide to reduce inventory to
B.sequence 2, 3, 4, 5 and 1 D.sequence 4, 3, 2, 1 and 5 alleviate a cash deficiency shown in its initial cash budget?
A.A lowering of X’s credit rating.
B.A decrease in X’s budgeted purchases. A.Accounts receivable will decrease. C.Outstanding debt will
C.A decrease in X’s cost-of-sales percentage. decrease.
D.A longer collection period for X’s credit sales. B.Cash balance will increase. D.The company will show a profit.
28.The cash budget for 20x2 would be affected in some way by all
24.A company has prepared a cash budget for January through June of the following EXCEPT
of 20x3. Which of the following, discovered in February 20x3, is A.The sales forecast for the first month in 20x3.
LEAST likely to require revising the cash budget? B.A cash dividend declared in 20x1 for payment in 20x2.
A.February sales are lower than budgeted. C.A cash dividend declared in 20x2 for payment in 20x3.
B.The company changed inventory methods from LIFO to FIFO. D.Interest expense on loans taken out and repaid during 20x2.
C.The interest rate on short-term borrowing is higher than budgeted.
D.The company increased from 10% to 20% the down payment it
requires from customers.
25.Which of the following is not a functional budget?
A.Cash budget C.Purchasing budget 29..Net cash inflow is given too much emphasis by managers today,
B.Direct labor cost D.Research and development budget for they know that cash is the
26.By the end of this year you expect to have a cash balance of common cause of business failures. Net cash inflow is equal to
P500,000. Which of these A.Cash balance at the beginning + cash receipts – cash
transactions/indicators (not considered in your estimate) will reduce disbursements
this balance? B.Cash received during the period minus cash disbursements during
A.A modification on credit terms to customers will reduce credit the period
sales. C.Cash balance at the end of last month + cash from all sources of
B.The ratio of current trade receivables to total receivables will revenue – revenue
decrease. payments
C.A dialogue with key suppliers will allow discounts on extended D.Cash sales and collections of accounts receivable minus revenue
payment terms. and capital expenditures
D.A new machine will be bought with proceeds from a bank loan 30.Information not shown in the cash budget but needed in the
that will carry a 17% preparation of the statement of
interest per annum and monthly payments over 2 years. operations for the period
27.If cash receipts from customers are greater than sales, which of A.Dividends C.Sales
the following is most likely to B.Inventory levels D.Tax Payments
be true? 31.A financing gap occurs when
A.Required assets exceed available equities.
B.Budgeted cash receipts are less than budgeted cash disbursements. B.The budget committee is responsible for preparing detailed budget
C.The budgeted cash balance goes below the minimum required figures in an
balance. organization.
D.Any of the above occurs. C.The primary purpose of the cash budget is to show the expected
32.Which of the following statements about budgeted financial cash balance at the end
statements is incorrect? of the budget period.
A.The budgeted income statement is developed from the budgeted D.Under zero-based budgeting, a manager is required to start at zero
for the current year. budget levels each
B.The budgeted balance sheet is developed entirely from the budgets period, as if the programs involved were being initiated for the first
for the current year. time.
C.Once established, the budgeted income statement provides the PROBLEMS
basis for evaluating Sales budget
company performance. 1. Budgeted sales for the first six months of 2001 for Henry Corp.
D.Cost of goods sold is determined by multiplying the budgeted unit are listed below:
sales by the budgeted Jan Feb Mar Apr May June
total unit production UNITS
33.On budgeting, all of the following are not valid, except :
A.A sales budget and a sales forecast are the same thing. 6,000 7,000 8,000 7,000 5,000 4,000
B.Responsibility budget identifies revenue and costs with the Henry Corp. has a policy of maintaining an inventory of finished
individual responsible for their goods equal to 40 percent of
incurrence. the next month's budgeted sales. If Henry Corp. plans to produce
C.The primary purpose of the cash budget is to show the expected 6,000 units in June, what are
cash balance at the end budgeted sales for July?
of the budget period. A.1,000 units C.8,000 units
D.The best way to establish budget figures is to use last year’s actual B.3,600 units D.9,000 units
cost and activity data
as this year’s budget estimates.
34.Which of the following statements is True? Questions 5 and 6 are based on the following information.
A.Budget data are generally prepared by top management and Sta. Barbara is one of the manufacturers of a part used in the
distributed downward in an production of a popular consumer
organization. product. Sales of the consumer product in 1985 are estimated at
5,000,000 units. Sta. Barbara
regularly supplies 40% of the parts used in the new products. Two 5. Each unit of product ZIM takes five direct labor hours to make.
parts units are needed for each Quality standards are high and
product unit. Aside from the new products, there is also a 8% of units produced are normally rejected due to substandard
replacement parts market. Over the past quality. Next month’s budgets
three years, the company has sold the following number of are as follows:
replacement parts: Beginning inventory of finished goods 3,000 units
1982 300,000 Planned ending inventory of finished goods 7,600 units
1983 330,000 Budgeted sales of ZIM 36,800 units
1984 363,000 All stocks of finished goods must have successfully passed the
This trend is expected to continue. The parts are sold for P4 per quality control check. What is
piece in the new products market the direct labor budget for the month?
and P4.50 in the replacement parts market. A.198,720 hours C.223,500 hours
2. The estimated number of parts to be sold by Sta. Barbara in 1985 B.200,000 hours D.225,000 hours
is 6. Tropical Manufacturing Corporation is using the following
A.2,399,300 C.4,399,300 flexible-budget formula for annual
B.4,000,000 D.4,435,600 indirect labor cost: Total cost = P12,000 + P0.75 per machine hour.
3. The amount of expected revenue based on the estimated number For the month of June,
of parts to be sold in 1985 is the operating budgets are based upon 10,000 hours of planned
A.P9,796,850 C.P17,597,200 machine time. Indirect labor
B.P16,000,000 D.P17,796,850 costs included in this planning budget are
Production budget A.P7,500 C.P17,500
4. Beatless Corp, plans to sell 200,000 units of Let-It-Be product in B.P8,500 D.P19,500
July and anticipate a growth Questions 7 and 8 are based on the following information.
in sales of 5% per month. The target ending inventory in units of the The budget committee of Ferbel Company is preparing its
product is 80% of the manufacturing budget for the year 1983.
next month’s estimated sales. There are 150,000 units in inventory Initial estimates indicate an annual sales forecast of 40,000 units.
as of the end of June. The The company shall also need
production requirement in units of Let-It-Be for the quarter ending 10,000 units for stock. Economic lot purchases of 1,750 kilos of
September 30 would be material A at P8 per kilo and 1,000
A.665,720 C.675,925 liters of material B at P15 per liter are required to produce the
B.670,560 D.691,525 50,000 units.
Budgeted factory overhead expenses for this production are:
Fixed factory overhead 10.Next month’s budgeted sales for TEMP is 18,000 units. Each unit
Supervision P4,000 of product TEMP uses 6
Depreciation P2,300 kilograms of raw materials. The production and inventory budgets
Insurance P 500 for June 1992 are as
Variable factory overhead follows:
Indirect labor P0.50 per direct labor hour Opening Inventory Planned Ending
Indirect supplies P0.008 per unit Inventory
General factory P0.10 per direct labor hour Raw materials 21,000 kgs. 24,400 kgs.
Labor hours and rates for the two operations are Finished goods 15,000 units 11,400 units
Operation 1 4,000 hours at P5.00 per hour During the production process, it is usually found that 10% of
Operation 2 2,000 hours at P4.50 per hour production units are scrapped as
defective and this loss occurs after the raw materials have been
7. Based on the above information, the budgeted total manufacturing placed in process.
costs for Ferbel Company What will the raw material purchases be in June?
for the year 1983 would be A.89,800 kgs. C.98,440 kgs.
A.P51,040 C.P68,800 B.96,000 kgs. D.99,400 kgs.
B.P60,800 D.P76,560 11.GLORIA CORP. has the following budget estimates for its
8. The factory overhead rate based on direct labor hours would be second year of operations:
A.P0.67 per direct labor hour C.P2.16 per direct labor hour Projected sales – P3,500,000
B.P1.80 per direct labor hour D.P2.70 per direct labor hour Projected net income before tax – 12% of sales
Raw materials purchases budget Estimated selling and administrative expenses – 25% of sales
9. Mien Co. is budgeting sales of 53,000 units of product Nous for Direct labor and factory overhead are budgeted at 70% of the total
October 2000. The manufacturing cost.
manufacture of one unit of Nous requires 4 kilos of chemical Loire. Inventories are estimated as follows:
During October 1998, Mine Raw materials Goods in process Finished goods
plans to reduce the inventory of Loire by 50,000 kilos and increase Beginning P220,000 P250,000 P350,000
the finished goods Ending 270,000 300,000 420,000
inventory of Nous by 6,000 units. There is no Nous work in process The estimated purchases of raw materials would be
inventory. How many A.P697,000 C.P747,500
kilos of Loire is Mien budgeting to purchase in October 2000? B.P732,500 D.P967,500
A.138,000 C.186,000 Operating expenses budget
B.162,000 D.238,000
12.Cook Co.’s total costs of operating five sales offices last year Gross Profit P 400,000
were $500,000, of which $70,000 Operating Expenses (including depreciation of P40,000) 240,000
represented fixed costs. Cook has determined that total costs are Net Income P 160,000
significantly influenced by Selling prices will increase by 10% and sales volume in units will
the number of sales offices operated. Last year’s costs and number decrease by 5%. The cost of
of sales offices can be goods sold as a percent of sales will increase to 62%. Other than
used as the bases for predicting annual costs. What would be the depreciation, all operating
budgeted cost for the costs are variable. Budji will budget a net income for 19B of
coming year if Cook were to operate seven sales offices? A.P167,100 C.P168,000
A.$586,000 C.$672,000 B.P167,500 D.P176,000
B.$602,000 D.$700,000 15.It is budgeting time for Del Co. The following assumptions were
13.Karmel, Inc. pays out sales commissions to its sales team in the agreed upon for the next year
month the company receives after a strategic planning session which covered a five-year horizon
cash for payment. These commissions equal 5% of total (monthly) 1. Sales is estimated to be at 70,000 units at its national selling price
cash inflows as a result of of P126.00. 75%
sales. Karmel has budgeted sales of $300,000 for August, $400,000 of total sales are on credit. 1.5% of net sales is provided for
for September, and doubtful accounts.
$200,000 for October. Approximately, half of all sales are on credit, 2. Sales discounts are given to various customers at different rates
and the other half are all and net to gross ratio
cash sales. Experience indicates that 70% of the budgeted credit is at 93%
sales will be collected in the 3. Mark-up on merchandise is at 45% of invoice cost. Beginning
month following the sale, 20% the month after that, and 10% of the inventory is P80,900
sales will be uncollectible. and is expected to be reduced by P15,000 at the end of the period.
Based on this information, what should be the total amount of sales 4. Selling and administrative expenses is expected to be 15% of
commissions paid out by gross sales.
Karmel in the month of October? 5. Depreciation is computed at P500,000.
A.$8,500 C.$17,000 The projected operating income for the year is
B.$13,500 D.$22,000 A.P173,802 C.P252,741
14.Budji Corp. is preparing its budget for 19B. For 19A, the B.P252,341 D.P296,841
following were reported: Cash budget
Sales (100,000 units) P1,000,000 16.Pera Inc. prepared the following sales budget
Cost of Goods Sold 600,000 Month Cash Sales Credit Sales
February P 80,000 P 340,000 18.MNO Corporation has a P35,000 balance of account receivable at
March 100,000 400,000 the beginning of its budget
April 90,000 370,000 period. It has budgeted P160,000 credit sales and expects to collect
May 120,000 460,000 70% of these during the
June 110,000 380,000 budget period.
Collections are 40% in the month of sale, 45% in the month What is the ending balance of accounts receivable assuming that all
following the sale, and 10% two but 10% of the beginning
months following the sale. The remaining 5% is expected to be balance is collected during the budget period.
uncollectible. The company’s A.$3,560 C.P71,500
total budgeted collection from April to June amounts to B.P51,500 D.P143,500
A.P1,090,250 C.P1,397,500 19.In preparing its cash budget for July, 19x7, Art Company made
B.P1,325,500 D.P1,468,500 the following projections
17.The following historical pattern on its credit sales of Rainy Co. Sales P1,500,000
was presented: Gross Profit 25%
70% collection during the month of sale. Decrease in inventories P 70,000
15% in the first month after sale. Decrease in accounts payable for inventories 120,000
10% in the second month after sale. For July, 19X7, what were the estimated cash disbursement for
4% in the third month after sale. inventories?
1% uncollectible. A.P 935,000. C.P1,055,000.
The sales on account of the last six months of the year were reported B.P1,050,000. D.P1,175,000.
as follows: 20.The January 1983 budget of Balagtas Company is being prepared
July P120,000 by the budget officer of the
August 140,000 company. In the preparation of the cash budget the estimates for the
September 160,000 month of January, 1983
October 180,000 include the following:
November 200,000 Sales P937,500
December 170,000 Gross profit (based on sales) 25%
The total cash collections during the fourth calendar quarter from Increase in inventories P75,000
sales made on account Decrease in trade accounts payable P30,000
during the fourth calendar quarter would be The estimated cash disbursements for inventories in January, 1983 is
A.P345,000 C.P502,800 A.P598,125 C.P748,125
B.P460,000 D.P550,000 B.P733,125 D.P808,125
21.Sta. Elena Merchandising Company plans to sell in December Decrease in gross amounts of trade account receivables 72,000
15,000 units of its product at a Purchase of equipment on 90-day credit terms 18,000
unit price of P20. The estimated gross profit is 25% of sales. The Provision for estimated warranty liability 12,000
inventory will be increased What is the expected change in the cash position during August?
in December in anticipation of higher sales volume for Christmas. A. $18,000 decrease. C. $36,000 increase.
The increase will be about B. $30,000 decrease. D. $54,000 increase.
P100,000. Amounts payable to trade creditors will also increase by 24.The following information was extracted from the May Cash
P25,000. Estimate of Budget of Hair Stars, a groom pad
payment to be made during the month of December for merchandise for men and women:
is Budget of Hair Stars, a groom pad for men and women:
A.P100,000 C.P250,000 Excess of cash available over disbursements P 800
B.P150,000 D.P300,000 Cash balance, May 1 10,100
22.JLT Corporation expects to sell 150,000 units during the first Total cash disbursement for May 32,500
quarter of 1998, with an ending The business can only borrow money in round figures of P1,000
inventory for the quarter of 20,000 units. Variable manufacturing amounts. If the business is
costs are budgeted at P50 required to maintain a minimum cash balance of P10,000, how much
per unit, with 70% of total variable manufacturing costs requiring money should be
cash payments during the borrowed in May?
quarter. Fixed manufacturing costs are budgeted at P120,000 per A.P9,200 C.P22,000
quarter, 40% of which are B.P10,000 D.P23,000
expected to require cash payment during the quarter. 25.Digna Company had the following transactions in 19x7, their
In the cash budget, payments for manufacturing costs during the first year of operations
quarter will total Sales (90% collected in 1997) P1,500,000
A.P5,298,000 C.P5,998,000 Bad debts write-offs 60,000
B.P5,950,000 D.P8,500,000 Disbursements for cost and expenses 1,200,000
23.Harrison Company has budgeted its operations for August. No Disbursement for income taxes 90,000
change in the inventory level Purchase of fixed assets 400,000
during the month is planned. Selected data based on estimated Depreciation of fixed assets 80,000
amounts are as follows: Proceeds from issuance of common stock 500,000
Net loss $(120,000) Proceeds from short-term borrowings 100,000
Increase in accounts payable 48,000 Payments on short-term borrowings 50,000
Depreciation expense 42,000 What is the cash balance at December 31, 19x7?
A.P150,000. C.P210,000. All sales are on charge basis and billed at the end of the month. A
B.P170,000 D.P280,000. 5% discount is given on
26.In preparing its budget for July, 1997, Joy Company has the collections within the 15 days from billing date. Sales collections are
following accounts receivable generally made as follows:
information available: 70% within the month following the billing date with 40% of this
Accounts receivable at June 30, 19x7 P350,000 being collected within the
Estimated credit sales for July P400,000 discount period.
Estimated collections in July for credit sales in July and prior 27% on the second month following the billing date.
months P320,000 3% considered uncollectible
Estimated write-offs in July for uncollectible credit sales P 16,000 Merchandise purchases are generally paid as follows:
Estimated provision for doubtful accounts for credit sales in July P 50% within the month they are incurred.
12,000 50% after the month they are incurred
What is the projected balance of accounts receivable at July 31, Ending inventory in units (cost per unit is P40) is 30% higher than
19x7? the following month’s sales in
A.P402,000. C.P426,000. units. Operating expenses are on cash basis and are estimated to be
B.P414,000. D.P430,000. 15% of the current month’s
Comprehensive sales including monthly depreciation of P10,000.
Questions 27 thru 30 are based on the following information. As of June 30, 1988, Accounts Receivable balance was P630,000
For purposes of preparing the cash projections and other budget and Merchandise Inventory was
estimates for the third quarter of P565,000
1988, the following information is presented to you by the .The budgeted cash collections for the month of July would be
management of Virgo Corporation: A.P391,020 C.P547,500
Second Quarter Sales Data: Pesos Units B.P539,520 D.P556,020
April P 530,000 10,600 28.The budgeted cash payments of the month of September would
May 550,000 11,000 be
June 570,000 11,400 A.P459,600 C.P518,000
Projected sales for the next four months Pesos Units B.P468,800 D.P533,600
July 540,000 10,800 29.The projected net income for September would be
August 550,000 11,000 A.P28,000 C.P112,000
September 560,000 11,200 B.P38,000 D.P122,200
October 580,000 11,600 30.The balance of accounts receivable at the end of July, assuming
that no uncollectible accounts
are written off for July would be Variable administrative and selling expenses is P1.00 per unit.
A.P613,980 C.P630,480 In assisting the company to formulate the budget, you determined
B.P622,500 D.P645,660 the following budget parameters.
Questions 31 thru 38 are based on the following information. 31.Budgeted cost of raw materials to be used in production is
The following information has been gathered by the Budget Director A.P8,910 C.P22,410
of the Kareton Company, B.P14,940 D.P124,500
another outfit managed by the Masugid Company. The firm 32.Budgeted raw materials purchases cost is
manufactures and sells only one A.P22,410 C.P23,760
product. The selling price during the coming month is expected to be B.P22,950 D.P124,500
the prevailing price of P5 per 33.Budgeted direct labor is
unit. Expected sales during the month is a total of 75,000 units of A.P20,750 C.P62,250
finished goods. Finished goods B.P33,200 D.P83,000
expected to be on hand at the end of the month total 50,000 units. 34.Variable overhead cost per direct labor hour is
Finished goods expected to be A.P1.60 C.P4.80
on hand at the beginning of he month total 42,000 units. B.P1.80 D.P6.40
Direct labor cost is P3.00 per hour. One-fourth an hour of direct 35.Fixed overhead cost per direct labor hour is
labor is required to manufacture A.P1.60 C.P4.80
each unit of finished product. B.P1.80 D.P6.40
Factory overhead is applied to work-in-process on the basis of direct 36.Budgeted contribution margin is
labor hours. Variable factory A.P1.80 C.P3.40
expenses at the planned level of operations is expected to amount to B.P2.58 D.P5.00
P33,200; fixed overhead is 37.Budgeted cost of goods sold (full cost) is
expected to amount to P99,600. P76,500 C.P196,500
The raw materials expected to be on hand at the beginning of the B.P96,500 D.P304,000
month total 5,000 gallons. Only 38.Net profit before tax is
one kind of raw material is used to produce the finished goods. One A.P53,000 C.P178,500
and one-half gallons of raw B.P103,500 D.P249,5
material are needed to manufacture each unit of finished product.
Raw materials are expected to
cost P0.18 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.