Question
DEF Company budgets sales at P2,000,000 and expects a net income before tax of 10% of the sales. Expenses are estimated as follows: Selling
DEF Company budgets sales at P2,000,000 and expects a net income before tax of 10% of the sales. Expenses are estimated as follows:
Selling 15% of sales
Administrative 9% of sales
Finance 1% of sales
Labor is expected to be 40% of the total manufacturing cost. Factory overhead is to be applied at 75% of direct labor cost.
Inventories are to be as follows:
January 1 December 31
Materials 250,000 300,000
Work in process 200,000 320,000
Finished goods 350,000 400,000
1. Materials purchases will be:
2. Cost of goods sold will be:
3. Factory overhead will amount to:
4. Total manufacturing cost will be:
GHI Company is preparing a flexible budget for 20X3 and the following maximum capacity estimates for department M are available:
At Maximum Capacity
Direct labor hours 60,000
Variable factory overhead P150,000
Fixed factory overhead P240,000
Assume that Dean's normal capacity is 80% of maximum capacity. What would be the total factory overhead rate, based on direct-labor hours, in flexible budget at normal capacity?
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