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Reviewer in Budgeting-Part 6

Sta. Barbara manufactures parts for a consumer product, supplying 40% of the needed parts for an estimated 5 million units in 2015. The company has a growing replacement parts market, with sales trends indicating an increase over the past three years. Additionally, various financial projections and budget estimates are provided for different companies and products, focusing on sales, costs, and cash disbursements.

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Maria Alegria
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97 views2 pages

Reviewer in Budgeting-Part 6

Sta. Barbara manufactures parts for a consumer product, supplying 40% of the needed parts for an estimated 5 million units in 2015. The company has a growing replacement parts market, with sales trends indicating an increase over the past three years. Additionally, various financial projections and budget estimates are provided for different companies and products, focusing on sales, costs, and cash disbursements.

Uploaded by

Maria Alegria
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Questions 5 and 6 are based on the following information.

Sta. Barbara is one of the manufacturers of a part used in the


production of a popular consumer product. Sales of the
consumer product in 2015 are estimated at 5,000,000 units.
Sta. Barbara regularly supplies 40% of the parts used in the new
products. Two parts units are needed for each product unit.
Aside from the new products, there is also a replacement parts
market. Over the past three years, the company has sold the
following number of replacement parts:
2012 300,000
2013 330,000
2014 363,000

This trend is expected to continue. The parts are sold for P4 per
piece in the new products market and P4.50 in the replacement
parts market.

5.​The estimated number of parts to be sold by Sta. Barbara in 2015


is
a.​2,399,300​ b.​4,000,000​ c.​ 4,399,300​ d.​4,435,600

6.​The amount of expected revenue based on the estimated number


of parts to be sold in 2015 is
a.​P9,796,850​ b.​P16,000,000​ c.​ P17,597,200​d.​
P17,796,850

7.​In preparing its cash budget for July, 2015, Art Company made
the following projections
Sales P1,500,000
Gross Profit 25%
Decrease in inventories P 70,000
Decrease in accounts payable for inventories 120,000

For July, 2015, what was the estimated cash disbursement for
inventories?
a.​P1,050,000.​ b.​ P1,055,000.​ c.​ P1,175,000.​
d.​ P 935,000.

8.​Cook Co.’s total costs of operating five sales offices last year were
P500,000, of which P70,000 represented fixed costs. Cook has
determined that total costs are significantly influenced by the
number of sales offices operated. Last year’s costs and number of
sales offices can be used as the bases for predicting annual costs.
What would be the budgeted cost for the coming year if Cook
were to operate seven sales offices?
a.​P700,000​ b.​P672,000​ c.​ P602,000​ d.​P586,000

9.​Each unit of product ZIM takes five direct labor hours to make.
Quality standards are high and 8% of units produced are
normally rejected due to substandard quality. Next month’s
budgets are as follows:
Beginning inventory of finished goods 3,000 units
Planned ending inventory of finished 7,600 units
goods
Budgeted sales of ZIM 36,800 units

All stocks of finished goods must have successfully passed the


quality control check. What is the direct labor budget for the
month?
a.​198,720 hours​ b.​ 200,000 hours​ c.​ 223,500
hours​ d.​225,000 hours​

10.​ Tropical Manufacturing Corporation is using the following


flexible-budget formula for annual indirect labor cost: Total cost
= P12,000 + P0.75 per machine hour. For the month of June, the
operating budgets are based upon 10,000 hours of planned
machine time. Indirect labor costs included in this planning
budget are
a.​P7,500​ b.​P8,500​ c.​ P17,500​ d.​P19,500

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