The following information was gathered by the ABC Committee Chairman of ABC Corporation:

ABC Corporation produces and sells only one product selling price during the budget period is expected to be the prevailing price of P7.50 per unit. The company expects to sell 112,500 units of the product during the period.

The desired finished goods inventory at the end of the period is 75,000 units, while the expected beginning inventory is 62,500 units. Direct labor is P4.50 per hour. Each product requires 30 minutes to complete. Factory overhead is applied to production on the basis of direct labor hours. Variable factory overhead cost at the planned level of operations is budgeted at P49,800; fixed budgeted overhead is budgeted at P149,400.

Each unit of product requires 1.5 kgs. of raw materials. Only one kind of raw material is used and it is expected to cost P0.30 per kilo. The desired ending inventory of raw materials is 12,000 kgs.; the expected beginning inventory is 9,500 kilograms.

Variable selling and administrative costs will amount to P1.50 per unit of product sold.

The budgeted income before tax is:

P191,970.

P360,720.

P843,750.

P173,220.

Answer rating: 100% (QA)

Given The company expects to sell 112500 units of the product during the period The desired finished goods inventory at the end of the period is 75000 units while the expected beginning inventory is 6... View the full answer