Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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:

  1. Sales budget
  2. Production Budget
  3. Direct material Purchases Budget
  4. Direct labor Budget
  5. Factory Overhead Budget
    1. Separate Variable and Fixed
    2. Determine the Factory Overhead application Rate Or Unit Costs= Total Factory Overhead/ Total Direct Labor Hours
  6. Selling and Administrative Expense Budget
  7. 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

================

 

 

 

 

 

  1. 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

===========

 

  1. Cost of Goods Sold Budget
  2. 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... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Ethical Obligations And Decision Making In Accounting Text And Cases

Authors: Steven Mintz

6th Edition

1264135947, 9781264135943

More Books

Students also viewed these Accounting questions

Question

Let A and B be two events in a sample space with A B. Then, A B = .

Answered: 1 week ago