New Era University Expanded Tertiary Education Equivalency and Accreditation Program MANAGERIAL ACCOUNTING FINAL REQUIREMENT The R3G Corporation has just registered its business on December 20, 2020. Before the end of the year, you, as the General Manager of the company was instructed by the Board of Directors to present the budgets for the year 2021. The following are the relevant information you had gathered: 1. The Company would manufacture a single product during the year. 2. Based on the research and study made by the Sales personnel, the sales forecast for the year is at 10,000 units sold evenly throughout the year. The desired ending inventory of finished goods is 20% of the next quarter projected sales. 3. The Production Department's report on the manufacture of the product's prototype showed the following: a. The raw materials required for a unit of finished good is six (6) lbs while it takes three (3) direct labor hours to manufacture it. The safety stock for raw materials is at 20% of the required materials in the next quarter production. b. The variable manufacturing overhead costs which are based on direct labor hours are as follows: 1. Indirect materials at P20 per hour; 2. Indirect labor at P15 per hour; 3. Utilities at P3 per hour; and 4. Repairs and maintenance at P2 per hour. c. The fixed manufacturing overhead consists of the following: 1. Factory manager's salaries - P30,000 per month; 2. Factory rental - P25,000 per month; 3. Depreciation of factory equipment - P245,000 per year 4. Other fixed factory costs - P40,000 per year d. No work in process is expected at the end of each quarter. 4. The Purchasing clerk reported that based on the inquiry with prospective suppliers, the raw materials are priced at P40 per lb. 5. The Accountant determined that the average labor rate of factory workers is P70 per hour. In addition, he reported that the Company's operating expenses are expected as follows: a. Selling expenses is at 10% of sales consisting of commission expense of 6% and delivery expense of 4%; b. Fixed operating expenses consist of the following: 1. Salaries - P100,000 per month (General Manager - P40,000, Accountant - P15,000, Cashier - P12,000, Sales clerk - P11,500, Purchasing clerk - P11,500, Janitor/Messenger - P10,000); 2. Office rental - P15,000 per month; 3. Utilities - P7,500 per month; 4. Depreciation - P139,000 per year; 5. Taxes and licenses - P20,000 per year; 6. The selling price should be set based on total manufacturing costs with a markup of 100% of said costs considering the management's desired rate of return on investment. The following are the policies and assumptions made by the Board with regards to the cash budget: 1. The stockholders paid P3,500,000 for their subscriptions upon registration of its business. At the end of 2020, the company purchased on cash manufacturing equipment costing P2,450,000 and office furniture and equipment amounting to P695,000. 2. Collection on sales is projected as follows: 70% during the quarter of sale; and the remaining 30% during the next quarter. 3. Payment of raw materials is projected as follows: 60% during the quarter of purchase; and the remaining 40%, during the next quarter. 4. Direct labor is paid in full during the quarter it is incurred. 5. All manufacturing costs and operating expenses, except depreciation, are paid during the quarter when the costs and expenses are incurred. 6. The Company is expected to purchase a delivery vehicle in the 4th quarter at P750,000. 7. Income tax rate is at 20% of taxable income and is paid in the succeeding quarter. 8. Cash balance should be at least P300,000 in a given quarter. Any deficiency should be sourced from the stand by credit line of the company which can be availed in multiple of P100,000 at 12% interest per annum. The loan shall be settled during the quarter when cash is already available provided the minimum cash balance requirement is met. Requirements: 1. Selling price 2. Breakeven point in peso and in units. 3. Quarterly Operating Budgets a. Sales budget b. Production budget c. Direct materials budget d. Direct labor budget e. Factory overhead budget f. Operating expenses budget g. Budgeted Income Statement 4. Financial Budgets a. Quarterly Budgeted Cash Flow Statement b. Annual Budgeted Statement of Financial PositionNew Era University Expanded Tertiary Education Equivalency and Accreditation Program MANAGERIAL ACCOUNTING FINAL REQUIREMENT The R3G Corporation has just registered its business on December 20, 2020. Before the end of the year, you, as the General Manager of the company was instructed by the Board of Directors to present the budgets for the year 2021. The following are the relevant information you had gathered: 1. The Company would manufacture a single product during the year. 2. Based on the research and study made by the Sales personnel, the sales forecast for the year is at 10,000 units sold evenly throughout the year. The desired ending inventory of finished goods is 20% of the next quarter projected sales. 3. The Production Department's report on the manufacture of the product's prototype showed the following: a. The raw materials required for a unit of finished good is six (6) lbs while it takes three (3) direct labor hours to manufacture it. The safety stock for raw materials is at 20% of the required materials in the next quarter production. b. The variable manufacturing overhead costs which are based on direct labor hours are as follows: 1. Indirect materials at P20 per hour; 2. Indirect labor at P15 per hour; 3. Utilities at P3 per hour; and 4. Repairs and maintenance at P2 per hour. c. The fixed manufacturing overhead consists of the following: 1. Factory manager's salaries - P30,000 per month; 2. Factory rental - P25,000 per month; 3. Depreciation of factory equipment - P245,000 per year 4. Other fixed factory costs - P40,000 per year d. No work in process is expected at the end of each quarter. 4. The Purchasing clerk reported that based on the inquiry with prospective suppliers, the raw materials are priced at P40 per lb. 5. The Accountant determined that the average labor rate of factory workers is P70 per hour. In addition, he reported that the Company's operating expenses are expected as follows: a. Selling expenses is at 10% of sales consisting of commission expense of 6% and delivery expense of 4%; b. Fixed operating expenses consist of the following: 1. Salaries - P100,000 per month (General Manager - P40,000, Accountant - P15,000, Cashier - P12,000, Sales clerk - P11,500, Purchasing clerk - P11,500, Janitor/Messenger - P10,000); 2. Office rental - P15,000 per month; 3. Utilities - P7,500 per month; 4. Depreciation - P139,000 per year; 5. Taxes and licenses - P20,000 per year; 6. The selling price should be set based on total manufacturing costs with a markup of 100% of said costs considering the management's desired rate of return on investment. The following are the policies and assumptions made by the Board with regards to the cash budget: 1. The stockholders paid P3,500,000 for their subscriptions upon registration of its business. At the end of 2020, the company purchased on cash manufacturing equipment costing P2,450,000 and office furniture and equipment amounting to P695,000. 2. Collection on sales is projected as follows: 70% during the quarter of sale; and the remaining 30% during the next quarter. 3. Payment of raw materials is projected as follows: 60% during the quarter of purchase; and the remaining 40%, during the next quarter. 4. Direct labor is paid in full during the quarter it is incurred. 5. All manufacturing costs and operating expenses, except depreciation, are paid during the quarter when the costs and expenses are incurred. 6. The Company is expected to purchase a delivery vehicle in the 4th quarter at P750,000. 7. Income tax rate is at 20% of taxable income and is paid in the succeeding quarter. 8. Cash balance should be at least P300,000 in a given quarter. Any deficiency should be sourced from the stand by credit line of the company which can be availed in multiple of P100,000 at 12% interest per annum. The loan shall be settled during the quarter when cash is already available provided the minimum cash balance requirement is met.

Requirements: 1. Selling price 2. Breakeven point in peso and in units. 3. Quarterly Operating Budgets a. Sales budget b. Production budget c. Direct materials budget d. Direct labor budget e. Factory overhead budget f. Operating expenses budget g. Budgeted Income Statement 4. Financial Budgets a. Quarterly Budgeted Cash Flow Statement b. Annual Budgeted Statement of Financial Position