MANAGEMENT ACCOUNTING II-BUDGETING

SOLVE EACH PROBLEM CAREFULLY. NO SOLUTION, NO CREDIT.

TIME LIMIT: STRICTLY 30 MINUTES
1.

Pink Company is budgeting sales of 100,000 units of Product R for the month of Septeember 2014. Production
of one unit of Product R requires two units of Material A and three units of material B. Actual inventory of
units at September 1, and budgeted inventory in units at September 30, are as follows:
Actual Inventorry- Sept 1
Budgeted Inventory Sept 30
Product R
20,000
10,000
Material A
25,000
18,000
Material B
22,000
24,000
How many units of Material B is Pink planning to purchase during September 2014?

2.

Lavender Company has budgeted its activity for October 2014 based on the following information:
Sales are budgeted at P300,000. All sales are credit sales and a provision for doubtful accounts is made
monthly at the rate of 3% of sales.
Merchandise inventory was P70,000 at September 30, 2014 and an increase of P10,000 is planned for
the month.
All merchandise is marked up to sell at invoice cost plus 50%.
Estimated cash disbursements for selling and administrative expenses for the month are P40,000.
Depreciation for the month is projected at P5,000.
Lavender is projecting operating income for the month of October 2014 in the amount of ________.

3.

In preparing its budget for July 2015, Maroon Company has the following accounts receivable data available:
Accounts receivable at June 30, 2015
P
350,000
Estimated credit sales for July
400,000
Estimated collections in July for credit sales in July and prior months
320,000
Estimated write-offs in July for uncollectible credit sales
16,000
Estimated provision for doubtful accounts for credit sales in July
12,000
What is the projected balance of accounts receivable at July 31, 2015?

4.

Yellow Company is preparing its cash budget for the month of August 2015. Projections for the month include
the following:
Sales
P400,000
Gross Profit rate
25%
Increase in inventories
P 30,000
Decrease in accounts payable
12,000
What are the estimated cash disbursements for inventory in August 2015?

5.

Red Company has projected cost of goods sold of P4,000,000 , including fixed costs of P800,000. Variable
costs are expected to be 75% of net sales. What will be the projected net sales?

6.

Total production costs for Blue Inc. are budgeted at P230,000 for 50,000 units of budgeted output and
P280,000 for 60,000 units budgeted unit. Because of the need for additional facilities, budgeted fixed costs for
60,000 units are 25% more than budgeted fixed costs for 50,000 units. How much is Blues budgeted variable
cost per unit of output?

7.

Black Company desires an ending inventory of P140,000. It expects sales of P800,000 and has a beginning
inventory of P130,000. Cost of sales is 65% of sales. Budgeted purchases are _______________.

8.

Gray Company has budgeted purchases of 19,000 units. The budgeted beginning inventory was 12,400 units
and the budgeted ending inventory was 13,000 units. Budgeted sales were _______________.

9.

Orange Company has budgeted sales of 25,000 units for July, 30,000 for August and 40,000 for September.
Orange desires an ending inventory equal to one-fourth of the following months sales needs. Budgeted
production for August is ________________.

10.

Green Company has prepared the following flexible budget for production costs: total production cost =
P260,000 + P5x, where x is the number of machine hours. Green produced 20,000 units, using 34,000 machine
hours at a total cost of P425,000. The flexible budget allowance for production costs is ____________.

11.

Violet Company makes all of its sales on account. Violet collects its accounts as follows: 70% in the month of
sale, 25% in the month following the sale, and 4% in the second month following the sale. Uncollectible
accounts are 1% of sales. Violet expects sales for the first three months of the year to be as follows: January

P90,000; February P95,000; and March P100,000. How much cash should Violet expect to collect in
March?
12.

Silver Company expects its purchases for June to be P130,000 and its purchase to be P130,000 and its
purchase for July to be P124,000. Silver pays for 60% of its purchase in the month of purchase and receives a
2% discount. Silver pays for the remaining 40% in the next month without discount. For purchases only, what
are the expected cash payments in July?

13.

Gold Company has a policy of maintaining an ending inventory of finished goods equal to 10% of the current
months sales. Gold met this requirement for March. Sales for March were 4,800 units, and Gold expects sales
for April to be 6,000 units. How many units should Gold produce in April?

14.

Bronze plans to produce 640 units during September. Each unit takes 4 kilos of materials. Bronze Company
desires an ending raw materials inventory of 320 kilos. The raw materials inventory on September 1 contained
240 kilos. How many kilos of materials should Bronze purchase in September?

15.

White Company base its manufacturing overhead budget on machine hours. Estimated machine hours are
10,000 for the quarter. White estimates its variable manufacturing overhead costs at P7 per machine hour.
White projects its fixed manufacturing overhead costs for the quarter to be P16,000 including P5,000
depreciation. By how much will manufacturing overhead costs affect the cash budget for the quarter?

16.

Brown Company expects cash collections during the year of P250,000. In addition, Brown expects P25,000 in
depreciation, P35,000 cash to be paid for direct labor, P2,000 to be paid for supplies and P55,000 to be paid for
raw materials. What is the budgeted net increase in cash for the year?

Additional requirement will be given to a student if he/she gets below 75% in this exam based
on a zero-based scoring system. In other words, a student should get a score of 12 or more to
be exempted from the additional requirement. Goodluck!