The following information has been gathered by the budget director of Joshua Company, another outfit managed by Aaron Inc.. The firm manufactures and sells only one product. The selling price is P 15 per unit. Expected sales during the month 50,000 units of finished goods. Finished goods at the beginning and end of the month is 22,000 and 20,000 units respectively. Direct labor costs P 4 per hour. One half of an hour is required to manufacture each unit of finished product. Factory Overhead is applied to work-in process on the basis of direct labor hours. Variable factory expense at the planned level of operations is expected to amount to P 72,000; fixed overhead is expected to amount to P 120,000. The raw materials expected to be on hand at the beginning of the month total 6,000 gallons. Only one kind of raw material is used to produce the finished product. Two and one half gallons of raw materials are needed to manufacture each unit of finished product. Raw materials are expected to cost P 1.10 per gallon during the coming month, its prevailing cost. Raw materials expected to be on hand at the end of the month total 4,000 gallons. Variable administrative and selling expenses is P 1.00 per unit. In assisting the company to formulate the budget, your determined the following budget parameters: The total expected peso sales should be: A. P 780,000 b. P 750,000 c. P 720,000 d. P 330,000 Finished goods in units to be produced during the month is: a. 50,000 b. 52,000 c. 72,000 d. 48,000 Budgeted cost of raw materials to be used in the production is a. P 132,000 b. P 134,200 c. P129,800 d. Answer not given Budgeted raw materials purchases cost is: a. P 132,000 b. P 134,200 c. P129,800 d. Answer not given Budgeting direct labor cost is a. P 192,000 b. P 96,000 c. P 200,000 d. P 208,000 Variable overhead per direct labor hour is a. P 1.50 b. P 2.50 c. P 3.00 d. P 5.00 Fixed overhead cost per direct labor hour is a. P 1.50 b. P 2.50 c. P 3.00 d. P 5.00 Budgeted contribution margin is a. P 7.25 b. P 6.25 c. P 8.75 d. P 7.75 Budgeted cost of goods sold (full cost) is: a. P 437,500 b. P 372,000 c. P 324,000 d. P 420,000 Income before tax is: a. P 300,000 b. P 262,500 c. P 228,000 d. P 252,500
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
The following information has been gathered by the budget director of Joshua Company, another outfit managed by Aaron Inc.. The firm manufactures and sells only one product. The selling price is P 15 per unit. Expected sales during the month 50,000 units of finished goods. Finished goods at the beginning and end of the month is 22,000 and 20,000 units respectively.
Direct labor costs P 4 per hour. One half of an hour is required to manufacture each unit of finished product. Factory Overhead is applied to work-in process on the basis of direct labor hours. Variable factory expense at the planned level of operations is expected to amount to P 72,000; fixed overhead is expected to amount to P 120,000.
The raw materials expected to be on hand at the beginning of the month total 6,000 gallons. Only one kind of raw material is used to produce the finished product. Two and one half gallons of raw materials are needed to manufacture each unit of finished product. Raw materials are expected to cost
P 1.10 per gallon during the coming month, its prevailing cost. Raw materials expected to be on hand at the end of the month total 4,000 gallons. Variable administrative and selling expenses is P 1.00 per unit. In assisting the company to formulate the budget, your determined the following budget parameters:
The total expected peso sales should be:
A. P 780,000 b. P 750,000 c. P 720,000 d. P 330,000
Finished goods in units to be produced during the month is:
a. 50,000 b. 52,000 c. 72,000 d. 48,000
Budgeted cost of raw materials to be used in the production is
a. P 132,000 b. P 134,200 c. P129,800 d. Answer not given
Budgeted raw materials purchases cost is:
a. P 132,000 b. P 134,200 c. P129,800 d. Answer not given
Budgeting direct labor cost is
a. P 192,000 b. P 96,000 c. P 200,000 d. P 208,000
Variable overhead per direct labor hour is
a. P 1.50 b. P 2.50 c. P 3.00 d. P 5.00
Fixed overhead cost per direct labor hour is
a. P 1.50 b. P 2.50 c. P 3.00 d. P 5.00
Budgeted contribution margin is
a. P 7.25 b. P 6.25 c. P 8.75 d. P 7.75
Budgeted cost of goods sold (full cost) is:
a. P 437,500 b. P 372,000 c. P 324,000 d. P 420,000
Income before tax is:
a. P 300,000 b. P 262,500 c. P 228,000 d. P 252,500
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