Exercises 4 Financial Planning Budgeting
Exercises 4 Financial Planning Budgeting
Exercises 4 Financial Planning Budgeting
P 102,000
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Additional information:
Sales are budgeted as follows:
February P110,000
March 120,000
Collections are expected to be 60% in the month of sale, 38% the next month, and 2%
uncollectible.
The gross margin is 25% of sales. Purchases each month are 75% of the next month’s projected
sales. The purchases are paid in full the following month.
Other expenses for each month, paid in cash, are expected to be P16,500. Depreciation each
month is P5,000.
2. What is the pro-forma income (loss) before income taxes for February 2021?
a. P(1,500) b. P(3,700) c. P3,800 d. P6,000
8. AB Co. is budgeting sales of 53,000 units of product C for October 2022. The manufacture of one
unit of C requires four kilos of chemical Z. During October 2022, AB plans to reduce the
inventory of Z by 50,000 kilos and increase the finished goods inventory of C by 6,000 units.
There is no C work in process inventory.
How many kilos of Z is AB budgeting to purchase in October 2014?
a. 138,000 b. 162,000 c. 186,000 d. 238,000
10. The company’s total cash receipts from sales and collections on account that would be
budgeted for the month of September would be
a. P757,500 b. P771,000 c. P793,800 d. P856,500
11. Rolling Wheels purchases bicycle components in the month prior to assembling them into
bicycles. Assembly is scheduled one month prior to budgeted sales. Rolling pays 75% of
component costs in the month of purchase and 25% of the costs in the following month.
Component cost included in budgeted cost of sales are:
April P5,000 May P6,000 June P 7,000 July P 8,000 August P 8,000
What is Rolling’s budgeted cash payment for components in May?
a. P5,750 b. P6,750 c. P7,750 d. $8,000
12. A 2014 cash budget is being prepared for the purchase of Tee, a merchandise item.
Budgeted data are
Cost of goods sold for 2022 P300,000
Accounts payable Jan. 1, 2022 20,000
Inventory, Jan. 1, 2022 30,000
Dec. 31, 2022 42,000
Purchases will be made in twelve equal monthly amounts and paid for in the following month.
What is the 2022 budgeted cash payment for purchases of Tee?
a. P295,000 b. P300,000 c. P306,000 d. P312,000