BUDGETING ●​ Food and supplies purchases, all on

account, are expected to be

Master Budget P116,000. A222’s Restaurant pays
1.​ Operating Budget
25% in the month of purchase and
2.​ Financial Budget
3.​ Capital Budget 75% in the month following
purchase.
1)​ Operating Budget ●​ Most of the work is done by the
a.​ Budgeted Income Statement owners, who typically withdraw
●​ Sales Budget P6,000 a month from the business as
●​ Production Budget their salary. (Note: The P6,000 is a
- Material cost budget
payment in total to the two owners,
​ - Labor cost budget
​ - Factory overhead budget not per person.) Various part-time
​ - Inventory levels workers cost P7,300 per month.
b.​ Cost of Sales Budget Expenses Budget They are paid for their work weekly,
c.​ Selling & Administrative so on average 90% of their wages are
d.​ Financial Expense Budget paid in the month incurred and the
remaining 10% in the next month.
2)​ Financial Budget
●​ Utilities average P5,950 per month.
a.​ Cash Budget
b.​ Capital Expenditure Budget Rent on the building is P4,100 per
c.​ Budget of Financial Income month.
​ ​ - Assets, Liabilities, Equity ●​ Insurance is paid quarterly; the next
payment of P1,200 is due in October.
3)​ Capital Investment Budget ●​ September sales were P181,500 and
purchases of food and supplies in
September equalled P130,000.
Financial Budget - Problems ●​ The cash balance on October 1 is
P2,147.
SHORT PROBLEMS
Required:
1.​ Cash Budget

A222’s Restaurant provided the following ●​ Calculate the cash receipts expected
information for the month of October: in October. (Hint: Remember to
include both cash sales and payments
●​ Sales are budgeted to be P157,000. from credit sales.)
About 85% of sales are cash; the ●​ Calculate the cash needed in October
remainder are on account. to pay for food purchases.
●​ A222’s Restaurant expects that, on ●​ Prepare a cash budget for the month
average, 70% of credit sales will be of October
paid in the month of sale, and 28%
will be paid in the following month.
 Solution: A222 Company provided the following
information for the coming year 2026:
a.​
Units produced and sold P160,000
Source October
Cost of goods sold per unit P6.30
Cash Sales (157K X 85%) P133,450
Selling price P10.30
Received on account
from: 16,485 Variable S&A expenses per P1.10
Month of Sale (157k unit
X 15% X 70%)
Fixed S&A expenses P423,000
September (181.5K X 7,623
15% X 28%) Tax Rate 35%

Total Cash Receipts P157,558 Required: Prepare a budgeted income

statement for A222 Company for the coming
b.​ Cash Payment [(116K X 25%) + year. (Note: Round all income statement
(130,000 X 75%)] P29,000 + amounts to the nearest peso.)
P97,500 = P126,500
c.​ A222 Company
Budgeted Income Statement
For the Year ended 2026

Beginning cash balance P2,147 Sales (160K X P10.30) P1,728,00

(Given) 157,558 0
Cash sales and collections on P159,705
account: (Req. A) Less: Cost of Goods Sold (1,008,000)
Total cash available (160K X P6.3)
Less disbursements P(126,500)
Payments for: (6,000) Gross Profit P720,000
Raw material (Req. B) (7,300) Less: Variable S&A (176,000)
Owner’s withdrawal (5,950) expenses (160K X P1.1)
(Given) (4,100)
Worker’s salary (Given) (1,200) Fixed S&A expenses (Given) (423,000)
Utilities (Given) P(151,050)
Rent (Given) P8,655 Income before income taxes 121,000
Insurance (Given)
Total disbursements Less: Income taxes (121,000 (42,350)
Ending cash balance x 35%)

Net Income P78,650

2.​ Budget of Financial Income

LONG PROBLEMS Beginning​ ​ 800 units @ P550
Ending​​ ​ 900 units @ P550
Work in process inventory​ ​ NONE
Comprehensive Budgeting Illustrated Raw materials:
DZRT 6059 Manufacturing Company
manufactures a special line of tools. As of
December 31, 2024, the Statement of Material Materia
Financial Position of the firm is as follows: DZ l RT

Materials required 4 Units 6 units

DZRT 6059 Manufacturing Company
per unit of finished
Statement of Financial Position
product
December 31, 2024
Assets Beginning inventory 2,000 3,500
Current assets
Cash ​ ​ P 200,000 Ending inventory 1,200 4,200
Accounts receivable ​ 250,000
Inventories ​ ​ 650,000 Unit Cost P12 P25
Other current assets ​ 30,000
Total Current Assets P 1,130,000 Direct labor​ P160 per unit produced
Long-term assets
PPE​ ​ ​ P 2,500,000
​ Less: Acc. depreciation 900,000 Overhead is estimated as follows:
Net ​ ​ ​ ​ P1,600,000 Variable:
Total assets​ ​ ​ P2,730,000 Indirect materials and supplies P 6.00
per unit produced
Equities Materials handling ​ 9.50 per unit
Current liabilities Other Indirect labor​ 5.50 per unit
Accounts payable​ P 160,000
Taxes payable ​ 170,000 Fixed:
Current portion of long-term debt Supervisor labor​ P 180,000
90,000 Maintenance & repair​​ 90,000
Total current liabilities P 420,000 Plant administration ​ ​ 180,000
Long-term liabilities​ P 300,000 Utilities ​ ​ ​ 90,000
Total liabilities​ P 720,000 Depreciation ​ ​ ​ 300,000
Equity Insurance ​ ​ ​ 45,000
Share capital,​ P 500,000 Property taxes ​ ​ 120,000
Retained earnings 1,510,000 Other ​ ​ ​ ​ 40,000
Total ​ ​ P2,010,000
Total Equities ​​ P2,730,000 Marketing and Administrative expenses are
budgeted as follows:
The following information is available for Variable Marketing Costs:
the development of its Master Budget for Sales commissions​ P42.00 per unit sold
20X9: Other marketing costs​ P20.00 per unit sold
Estimated sales: Fixed Marketing Costs:
Units ​ ​ ​ ​ ​ 7,000 Sales salaries ​ P 110,000
Prince per unit ​ ​ P900 Advertising ​ 200,000
Finished goods inventory
Other 80,000 Variable marketing costs
Administrative costs (all fixed):
Administrative salaries ​ P 260,000 Sales commission (7,000 @ 294,000
Data processing services ​ 110,000 P42.00)
Legal and other professional fees 190,000
Depreciation - building, furniture, and Others (7,000 @ P20.00) 140,000
equipment ​ ​ 95,000
Taxes - other than income 170,000 Total Variable Marketing 434,000
Other ​ ​ ​ ​ 30,000 Costs

Fixed marketing costs

Additional information:
Sales Salaries 110,000
The treasurer's office also provided the
following information and estimates: Advertising 200,000
1.​ All sales are on account and
collections from customers are Others 80,000
expected to amount to P6,200,000.
2.​ Equipment costing P350,000 with Total Fixed Marketing 390,000
accumulated depreciation of Costs
P320,000 will be sold at its net book
value. New equipment costing Total Marketing Costs 824,000
P380,000 will be purchased during
the year. Administrative Costs (All
3.​ Accounts payable will increase by Fixed)
P20,000 and assumed to be for Administrative Salaries 260,000
materials purchases only.
4.​ Income taxes will be provided at an Data processing services 110,000
average rate of 30% of income
before taxes while P270,000 will be Legal and other 190,000
paid during the year. professional fees
5.​ Dividends amounting to P150,000
will be paid during the year and the Depreciation - building, 95,000
current portion of the long-term debt furniture, and equipment
shall also be settled at the end of the
year. Interest rate is 7% per annum. Taxes - other than income 170.000

Others 30,000
REQUIRED:
Prepare the Master Budget for DZRT 6059 Total Administrative Costs 855,000
Company for the year ending December 31,
2025.​ Total Marketing and 1,679,000
​ Administrative Costs
Marketing and Administrative Expense
Budget
Budgeted Marketing and Administrative
Costs for 2025
Cash Budget Budgeted Income Statement

DZRT 6059 Manufacturing Company

Cash Budget DZRT 6059 Manufacturing Company
For the Budget Year Ending Dec 31, 2025 Budgeted Income Statement
For the Budget Year Ending December 31,
2025
Cash balance, January 1, 2025 P 200,000

Add: Estimated Receipts Sales (Schedule 1) 6,300,000

Collections from Customers 6,200,000 Less: Cost of Sales 3,680,900

(Schedule 6)
Sale of assets (P350,000 - 30,000
P320,000) Gross Profit 2,619,100

Total 6,230,000 Less: Marketing and 1,679,000

Administrative Cost
Total Cash Available 6,430,000 (Schedule 7)
Less: Estimated Net Operating Profit 940,100
Disbursements
Less: Interest Expense (7% 21,000
Payment for Material 1,413,700 of 300,000)
Purchases (P331,200 +
P1,082,500) Net Income before taxes 919,100

Direct Labor 1,136,000 Less: Provision for income 275,730

taxes (30%)
Manufacturing overhead 894,100
(excluding depreciation) Net Income after taxes P 643,370

Marketing and Administrative 1,494,000 Budgeted Statement of Financial Position

expenses (excluding
depreciation)
DZRT 6059 Manufacturing Company
Payments for income tax, 270,000 Budgeted Statement of Financial Position
interest etc. December 31, 2025
Dividends 150,000
Assets Amount Liabiliti Amount
Reduction in long-term debt 90,000 (P) es and (P)
Equities
Acquisition of new assets 380,000
Current Current
Total Disbursements 5,827,800 Assets Liabiliti
es
Cash balance, December 31 P602,200
Cash P Account P
(Schedul 602,200 s 180,000
e 8) Payable

Account 250,000 Taxes 170,000

s Payable
Receivab
le

Inventori 495,000
es

Other 30,000
Current
Assets

Total 1,377, Total 350,000

Current 200 Current
Assets Liabiliti
es

Long-te Long 210,000

rm Term
Assets Liabiliti
es

Property, 2,530, Total 560,000

Plant and 000 Liabiliti
Equipme es
nt

Less: 1,225,
Accumul 000
ated
Deprecia
tion

Net 1,305,\0 Retained

00 Earnings

Total P 2,682, Total 2,122,

Assets 200 Equity 370

Total P 2,682,
Liabilit 200
y and
Equity