For January, February, and March 2021, Mr. Santos plans to sell Chemical A in the following schedule: 20 liters in January; 30 liters in February; and 30 liters in March. Consider the following assumptions:Assumptions: (sales received in cash; cost and expenses paid in cash)Price Per Liter (in Pesos)10,000Salaries Per Month(in Pesos)Cost Per Liter Salesman30,000 Labor25% of Price Assistant20,000 Materials25% of PriceTotal Salaries50,000Selling Expenses Per Month (Pesos)50,000 Miscellaneous (Per Month)10,000 Other Assumptions:All Sales are on cash basis.Production costs are paid in cash; labor is subcontracted.All purchases of raw materials are paid in cash.All finished goods are assumed to be sold. No ending inventory.No taxes considered. REQUIRED:a. FINANCIAL PLAN FOR JANUARY, FEBRUARY, AND MARCHb. Sales Forecast and Cost (Production) and Expense Budgetc. Income Statement (up to operating income) for the three months in consideration.

Budget is prepared to estimate or plan expenses and revenue to be incurred or generate in a…

Answered: For January, February, and March 2021,…

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter15: Managing Short-term Assets

Section: Chapter Questions

Problem 1PROB

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For January, February, and March 2021, Mr. Santos plans to sell Chemical A in the following schedule: 20 liters in January; 30 liters in February; and 30 liters in March. Consider the following assumptions:

Assumptions: (sales received in cash; cost and expenses paid in cash)

Price Per Liter (in Pesos)	10,000	Salaries Per Month	(in Pesos)
Cost Per Liter		Salesman	30,000
Labor	25% of Price	Assistant	20,000
Materials	25% of Price	Total Salaries	50,000
Selling Expenses Per Month (Pesos)	50,000
		Miscellaneous (Per Month)	10,000

Other Assumptions:

All Sales are on cash basis.
Production costs are paid in cash; labor is subcontracted.
All purchases of raw materials are paid in cash.
All finished goods are assumed to be sold. No ending inventory.
No taxes considered.

REQUIRED:

a. FINANCIAL PLAN FOR JANUARY, FEBRUARY, AND MARCH

b. Sales Forecast and Cost (Production) and Expense Budget

c. Income Statement (up to operating income) for the three months in consideration.

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