Question
The Budget Committee is now ready with the budget estimates for the preparation of the Operating budget of Mabuhay Company for the Year 2021. The
The Budget Committee is now ready with the budget estimates for the preparation of the Operating budget of Mabuhay Company for the Year 2021. The following data were presented below:
| Finished Product` | |
| Model B | Model M |
Budget sales units | 8,000 | 5,000 |
Selling Price/unit | P140 | P170 |
Inventory- beginning - units | 850 | 600 |
Expected Inventory end - units | 700 | 500 |
| Material M1 | Material M2 | Material M3 |
Inventory Beginning - units | 5,000 | 4000 | 3,000 |
Expected inventory end - units | 5,500 | 5,000 | 3,600 |
Material Content of each unit: | Model B | Model M |
Material M1 | 6 units | 4 units |
Material M2 | 4 units | 3 units |
Material M3 | 2 units | 3 units |
Direct labor | 10 hours | 15 hours |
Overhead is applied based on 100% of direct labor hours.
Budgeted unit costs:
Material M1 | P2.00/unit |
Material M2 | 2.50/unit |
Material M3 | 3.00/unit |
Direct labor | 3.0/hour |
Other budgeted data based on production are shown below:
Factory Overhead: |
|
Indirect labor | P91,200 |
Factory Supplies | 45,600 |
Repairs and Maintenance | 68,400 |
Other variable costs | 22,800 |
Factory supervision | 60,000 |
Factory rent | 48,000 |
Depreciation- equipment | 30,000 |
Other fixed costs | 14,000 |
Selling and Administrative: |
|
Sales salaries | P84,000 |
Sales commission | 39,400 |
Advertising expense | 29,500 |
Representation expense | 24,000 |
Officers' salaries | 120,000 |
Office Salaries | 48,000 |
Office expenses | 12,000 |
Miscellaneous Expenses | 8,100 |
Income taxes are expected at 30%. Finished Goods inventory beginning is P126,000. There is not beginning and ending work in process inventory
Requirement: Prepare the Operating Budget of Mabuhay Company for the year 2021 to include the following:
- Sales budget
- Production Budget
- Direct material Purchases Budget
- Direct labor Budget
- Factory Overhead Budget
- Separate Variable and Fixed
- Determine the Factory Overhead application Rate Or Unit Costs= Total Factory Overhead/ Total Direct Labor Hours
- Selling and Administrative Expense Budget
- Compute Unit Costs for Model B and Model M. Use matrix template below
Model B: (A) | Units Costs (B) | Hours Units(C) | Amount (B x C) |
|
|
|
|
Material M1 | P |
| P |
Material M2 |
|
|
|
Material M3 |
|
|
|
Direct Labor |
|
|
|
Factory Overhead |
|
|
|
Total Unit Costs |
|
| P ================ |
- Ending Inventory Budget - Use Matrix template below:
Finished Goods (A) | Units Costs (B) | Hours Units(C) | Amount (B x C) |
Model B |
|
|
|
Model M |
|
|
|
Total |
|
| P |
Materials (A) | Units Costs (B) | Hours Units(C) | Amount (B x C) |
Material M1 |
|
|
|
Material M2 |
|
|
|
Material M3 |
|
|
|
Total |
|
| P |
Total Ending Inventory |
|
|
P =========== |
- Cost of Goods Sold Budget
- Projected Income Statement
Step by Step Solution
3.47 Rating (160 Votes )
There are 3 Steps involved in it
Step: 1
SOLUTION Sales Budget Model B 8000 units x P140 P1120000 Model M 5000 units x P170 P850000 Total Sales P1970000 Production Budget units Model B Budget...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started