MANAGEMENT ADVISORY SERVICES - BUDGETING

PROBLEM 1:

It is May 28 and you have just gotten a summer job that will pay you (net of taxes) P800 per month. You start June 1 and will work until school starts halfway through August. Your scholarship pays for tuition, room and board. But you must buy books, pay for transportation to and from school, and pay for clothing, any extra meal, entertainment, and so on. You have gathered the following data:

1. One round trip airline ticket is P260, and you'd like to come home for Thanksgiving (your parents will drive you there in August, and you will try to catch a ride home with another student in December).

2. Books are estimated to cost about P500 per semester for your anticipated major

3.Supplies should be another P150

4.Clothing might run P100 you already have almost everything you think you'll need.

5.There are 16 weeks in the semester, and you think you'll need P50 per week for allowance to cover extra meals and entertainment

6.Before school even starts, you need to cover any summer expenses, including going out with friends. P30 a week sounds about right, since all your friends will be working and saving for college as well. There are 11 weeks of summer.

Right now, you have P200 in your checking account.

A. Create a cash budget for the summer and the first semester of college. (Do the entire time period, do not break it down by week or by month.)

B. Comment on the estimated ending balance. What actions can you take, if any, to increase it?

PROBLEM 2:

JJJL Corporation has the following budgeted sales for the selected six-month period:

Month - Unit Sales

June 15,000

July 20,000

August 35,000

September 25,000

October 30,000

November 20,000

There were 7,500 units of finished goods in inventory at the beginning of June. Plans are to have an inventory of finished product equal to 20 percent of the unit sales for the next month.

Three pounds of materials are required for each unit produced. Each pound of material costs P20. Inventory levels for materials equal 30 percent of the needs for the next month. Materials inventory on June 1 was 5,000 pounds.

Required:

A. Create production budgets in units for July, August, and September.

B. Create a purchases budget in pounds and Pesos for July, August, and September.

PROBLEM 3:

BAM Company has the following projected account balances for September 30 of the current year:

Accounts payable - 20,000

Accounts receivable -50,000

Depreciation, factory - 12,000

Inventories (8/31) - 90,000

Inventories (9/30) - 90,000

Materials used - 100,000

Office salaries - 40,000

Insurance, factory - 2,000

Factory wages - 70,000

Bonds payable - 80,000

Sales - 400,000

Capital stock - 200,000

Retained earnings (beginning) - 64,000

Maintenance, factory - 14,000

Cash - 28,000

Equipment, net - 120,000

Buildings, net - 200,000

Utilities, factory - 8,000

Selling expenses - 30,000

Required:

A. Create a budgeted income statement for the month ended September 30.

B. Create a budgeted balance sheet as of September 30.

(Kindly show the solution and explanation, thankyou!)