.

Answer: A
The amount of fixed costs in operating branches 10 warehouses is P400,000 (the fixed cost line intercepts
the vertical axis).
Total operating costs P2,900,000
Less fixed costs 400,000
Total variable costs (10 warehouses) P2,500,000
Variable costs per branch: P2,500,000 10 P 250,000

. Answer: A
Cost of units sold (0.65 x P800,000) P520,000
Add Desired ending inventory 140,000
Total cost of goods available for sale 660,000
Deduct Beginning inventory 130,000
Budgeted purchases P530,000

. Answer: A
Cost of goods sold P750,000 x 0.6 P450,000
Add Ending Inventory P800,000 x 0.6 x 0.5 240,000
Total available for sale P690,000
Deduct Beginning inventory P450,000 x 0.5 225,000
Budgeted purchases, February P465,000

. Answer: D
Cost of sales P120,000
Add Desired ending inventory 42,000
Total available for sale 162,000
Deduct Budgeted purchases 100,000
Beginning inventory P 62,000

. Answer: A
Total payments for purchases in June P140,000
Deduct payments applicable to purchase of:
June (P100,000 x 0.6) P60,000
May (P200,000 x 0.30) 60,000 120,000
Payments applicable to April purchase P 20,000
Credit purchase in April: P20,000 0.10 P200,000

. Answer: C
Budgeted sales, First Quarter 120,000 units
Add Required Ending Finished goods: 30% x 160,000 48,000 units
Total units required 168,000 units
Less Beginning Finished goods 36,000 units
Budgeted production in units 132,000 units

. Answer: C
Sales for three-month period:
July 400,000
August 400,000 x 1.05 420,000
September 420,000 x 1.05 441,000
Total 1,261,000

Inventory, September 30 (441,000 x 1.05 x 0.8) 370,440
Total Requirements 1,631,440
Less July Inventory 300,000
Budgeted Production 1,331,440

. Answer: C
Beginning Inventory (8000 x 3.5) 28,000
Required Purchases 8,000
Direct Materials Used for Production (8000 x 3) (24,000)
Desired Ending Inventory 12,000

. Answer: C
LL MM NN
Budgeted production 622,000 622,000 622,000
Required materials per unit of product 0.50 1.00 1.2
Materials required 311,000 622,000 746,400
Unit cost P0.60 P1.70 P1.00
Peso amounts of materials used by
units produced

P186,600

P1,057,400

P746,400

Budgeted sales in units 640,000
Add Finished goods, end 90,000
Total 730,000
Deduct Finished goods, beginning 108,000
Budgeted production 622,000

. Answer: D
Required pounds by production 180,000
Ending raw materials required 60,000
Beginning raw materials ( 30,000)
Budgeted purchases 210,000

. Answer: B
Materials required by June production 1,300 x 2 2,600
Add Ending raw materials inventory 1,600 x 2 x 0.5 1,600
Total materials required 4,200
Deduct Beginning materials inventory 1,300 x 2 x 0.5 1,300
Materials to be purchased 2,900

. Answer: D
Budgeted sales 18,000
Add Finished goods inventory, end 11,400
Total 29,400
Deduct Finished good inventory, beginning 15,000
Budgeted production 14,400

Raw materials required by production (14,400 x 6 0.9) 6,000
Desired Raw materials inventory end 24,400
Total 120,400
Deduct Raw materials inventory, beginning 21,000
Budgeted purchase of raw materials 99,400

. Answer: D
Raw materials required by June production: 1,200 x 2 2,400
Add: Ending materials inventory 1,300 x 2 . 1.5 3,900
Total materials required 6,300
Deduct Beginning material inventory 2,400 x 1.5 3,600
Budgeted materials purchase 2,700

. Answer: A
Budgeted sales 300,000
Less decrease in Finished goods inventory 10,000
Budgeted production 290,000

Material Q required by production 290,000 x 3 870,000
Less decrease in Material Q inventory 60,000 80,000 20,000
Budgeted purchase in pounds, Material Q 850,000

. Answer: B
Materials required by production 500,000 x 2 1,000,000
Increased in materials inventory (50,000 40,000) 10,000
Purchases 1,010,000

. Answer: B
Materials required by 2nd Quarters production 45,000 x 2.5 kgs. 112,500
Add: Materials inventory, end: 40,000 x 2.5 x0.25 25.000
Total materials required 137,500
Less: Materials inventory, beginning: 112,500 x 0.25 28,125
Total budget purchases in kilograms 109,375

. Answer: D
Under flexible budget, analysis should be based on actual level achieved.
Indirect labor cost per unit (P360,000 200,000 units) P1.80
Flexible budget allowance: 14,500 units x P1.80 P26,100

. Answer: C
Cash sales (March) 0.2 x P420,000 P 84,000
Collections of account sales:
March sales: (P420,000 x 0.8 x 0.7) 235,200
February sales: (P300,000 x 0.8 x 0.25) 60,000
January sales: (P240,000 x 0.8 x .05) 9,600
Total cash from sales P388,800

. Answer: B
Total cash collections P57,000
Deductions collections on September sales (P80,000 x 0.6) 48,000
Collections applicable to July and August sales P 9,000
Credit sales in July: P9,000 2 0.15 P30,000

. Answer: D
Collections from:
January sales (P860,000 x 0.8 x 0.75) P516,000
December sales (January 1 Accounts) 299,000
Collections of credit sales 815,000
Cash sales (P860,000 x 0.2) 172,000
Total cash received P987,000

. Answer: A
Collections sales of:
June: P8,000 x 0.7 P5,600
May: P7,000 x 0.3 2,100
Total collections from sales P7,700

. Answer: B
October 90,000 x .95 P 85,500
November 100,000 x .85 85,000
December 85,000 x .70 59,500
Fourth quarter sales collected in fourth quarter P230,000

. Answer: D
Cash sales P 70,000
Collections from account sales:
January (P340,000 x 0.60) 204,000
December (P50,000 x 30/40) 37,500
November 20,000
Total cash receipts in January P331,500

. Answer: B
The balance of Accounts Receivable, based on the collection pattern for Liberal Sales Company, equals 40
percent of credit sales for that month:
P1,500,000 x 0.8 x 0.4 = P480,000

. Answer: C
Gross receivable collected months sales
November 2,000,000 x .12 P 240,000
October 1,800,000 x .75 1,350,000
September 1,600,000 x .06 96,000
August 1,900,000 x .04 76,000
Total credit P1,762,000

. Answer: A
The balance of Accounts Receivable as of January 31, its first month of operations, will increase by P400,000
because the first collection on account sales will be in February.
However, a question of how much increase in Accounts Receivable in February will equal to the difference
between the February credit sales and 70% of January sales.

. Answer: D
Cost of goods sold P1,680,000
Deduct desired decrease in inventories 70,000
Budgeted purchases P1,610,000
Add decrease in Accounts Payable 150,000
Budgeted payments for purchases P1,760,000

. Answer: A
November costs (P1,952,000 P288,000) x 0.75 P1,248,000
October costs (P1,568,000 P288,000) x 0.25) 320,000
Total disbursements P1,568,000

. Answer: C
Beginning Cash P 20,000
Add:Cash collected on June's sales (P300,000 x .8 x .98) 235,200
Cash collected on May's sales ((P300,000/1.25) x .2) 48,000 283,200
Total P303,200
Less:Cash paid on June's purchases (P240,000 x .6 x .99) 142,560
Cash paid on May's purchases (P200,000 x .4) 80,000 222,560
Ending cash balance P80,640

. Answer: C
January February
Budgeted sales 11,900 11,400
Add: Ending inventory (130%) 14,820 15,600
Total 26,720 27,000
Less: Beginning inventory 15,470 14,820
Budgeted purchases (units) 11,250 12,180
Unit purchase price 200 200
Budgeted peso purchases P2,250,000 P2,436,000

Budgeted inventories:
December 31 130% x 11,900 15,470
January 31 130% x 11,400 14,820
February 28 130% x 12,000 15,600
March 31 130% x 12,200 15,860

. Answer: D
Payments for:
February purchases 54% x P2,436,000 P1,315,440
January purchases 46% x P2,250,000 1,035,000
Total payments for purchases P2,350,440
Selling, general and administrative expenses:
February: [(P3,420,000 x 0.15) P20,000]0.54 266,220
January: [(P3,570,000 x 0.15) P20,000]0.46 237,130
Total cash disbursements P2,853,790

. Answer: A
Billings of December 31:
Collections with 3% discount P3,630,000 x 0.6 x 0.97 P2,112,660
Collections end of January P3,630,000 x 0.25 907,500
Billings of November 30: P3,540,000 x 0.09 318,600
Total collections P3,338,760

. Answer: B
Budgeted March sales 12,000
Add: Ending inventory units 15,860
Total units required 27,860
Less: Beginning inventory units 15,600
Budgeted purchases in units, March 12,260

. Answer: A
Payments for purchases in the month of:
December (0.2 x P120,000 x 0.6) P14,400
January (0.2 x P160,000 x 0.4) 12,800
Total January disbursements for purchases P27,200

. Answer: C
Payments for purchases:
May purchase (0.2 x P200,000 x 0.6) P24,000
June purchase (0.2 x P220,000 x 0.4) 17,600
Total 41,600
Labor costs 60,000
Fixed Overhead 30,000
Interest payments 45,000
Commission (0.03 x P1,020,000) 30,600
Total disbursements P207,200

. Answer: C
June cash sales (P390,000 x 0.1) P 39,000
Collections from account sales:
April sales (P390,000 x 0.9 x 0.7) 245,700
May sales (P420,000 x 0.9 x 0.3) 113,400
Total cash receipts, June P398,100

. Answer: B
Marketable securities purchased on:
June P 5,600
July 126,900
Cumulative purchase of MS P132,500

. Answer: A
Cash Budget (P000)
June July Aug Sept
Cash receipts P398.1 P404.9 P382.2 P374.9
Cash disbursements 367.5 278.0 296.5 702.5
Net cash inflow (outflow) 30.6 126.9 85.7 ( 327.6)
Beginning cash balance 25.0 50.0 50.0 50.0
Cumulative cash balance 55.6 176.9 135.7 ( 277.6)
M/S sold (purchased) - 5.6 - 126.9 - 85.7 218.2
Cash loan 0.0 0.0 0.0 109.4
Cash balance, end P 50.0 P 50.0 P 50.0 P 50.0

Cash Receipts (P000)
June July Aug Sept
Account sales (90%) P351.0 P315.0 P378.0 P369.0
Cash sales P 39.0 P 35.0 P 42.0 P 41.0
Collection of accounts
First month (30%) 245.7 105.3 94.5 113.4
Second month (70%) 113.4 264.6 245.7 220.5
Total P398.1 P404.9 P382.2 P374.9

Cash Payments (P000)
June July Aug Sept
Purchases P210.0 P240.0 P320.0 P230.0
First month (45%) P 99.0 P 94.5 P108.0 P144.0
Second month (55%) 110.0 121.0 115.5 132.0
Total purchases paid 209.0 215.5 223.5 276.0
Labor 58.5 52.5 63.0 61.5
General overhead 10.0 10.0 10.0 10.0
Interest 35.0 35.0
Cash dividend 25.0
Taxes 30.0 30.0
Purchase of equipt. 290.0
Total payments P367.5 P278.0 P296.5 P702.5

. Answer: A
Budgeted Production
January February March Total
Sales 1,700,000 1,200,000 1,400,000 4,300,000
Inventory, end 2,600,000 3,400,000 4,500,000 4,500,000
Total 4,300,000 4,600,000 5,900,000 8,800,000
Inventory, beg. (2,900,000 (2,600,000 (3,400,000 (2,900,000
Budgeted production 1,400,000 2,000,000 2,500,000 5,900,000

. Answer: B
Payments for Purchases:
January (December purchases - 1,800,000 x 0.052) P 93,600
February (January purchases 1,400,000 x 0.06) 84,000
March (February purchases 2,000,000 x 0.06) 120,000
Total for the quarter P297,600

. Answer: B
Budgeted Collections on Accounts Receivable
January February March Total
November sales 87,500 87,500
December sales 116,250 116,250 232,500
January sales 131,750 131,750 263,500
February sales 93,000 93,000
Total 203,750 248,000 224,750 676,500

. Answer: C
A months sales is collected 50 percent each in the first and second month. Therefore, the accounts receivable
outstanding as of March 31 includes Marchs sales as well as 50 percent of February sales.
Februarys accounts (P186,000 x 0.5) P 93,000
Marchs sales 217,000
Outstanding accounts receivable, March 31 P310,000

. Answer: A
Current unit cost per 1,000
Material P 52
Labor 20
Overhead 10
Total P 82

Effective January 1, 2007, the price of materials will be raised to P60. The unit cost for 2007 production will be
P90. Since the sales of January and February come from December production, only the March sales will have
cost of P90 per thousand.

January and February cost of goods sold (1,700 + 1,200) x P82 P237,800
March 1,400 x P90 126,000
Cost of goods sold (first quarter) P363,800

. Answer: A
January February March
Cash collections 203,750 248,000 224,750
Cash disbursements
Payments for materials 93,600 84,000 120,000
Labor expenses 28,000 40,000 50,000
Overhead 14,000 20,000 25,000
Selling & administrative 52,700 37,200 43,400
Interest 8,000
Taxes 64,560
Dividends . . 48,420
Total disbursements 188,300 181,200 359,380
Net Cash Inflow (Outflow) 15,450 66,800 (134,630)
Cash Balance, Beginning 30,000 25,000 25,000
Cumulative cash balance 45,450 91,800 (109,630)
Marketable securities 20,450 66,800 ( 87,250)
Cumulative MS 20,450 87,250
Borrowings 0 0 47,380
Cash Balance, End 25,000 112,250 25,000

. Answer: C
Proforma Income Statement
January February March Total
Sales 263,500 186,000 217,000 666,500
Cost of goods sold 139,400 98,400 126,000 363,800
Gross profit 124,100 87,600 91,000 302,700
Selling expenses, 20% 52,700 37,200 43,400 133,300
Operating income 71,400 50,400 47,600 169,400
Interest expense 2,667 2,667 2,666 8,000
Income before tax 68,733 47,733 44,934 161,400
Income tax, 40% 27,493 19,093 17,974 64,560
Net income 41,240 28,640 26,960 96,840

. Answer: A
August sales
Billed 8/20 P350,000 x 18% P 63,000
Billed 9/10 P350,000 x 80% x 98% 274,400
Collections in Sept of Aug sales P337,400

. Answer: B
Russon provides 25 percent of next months quantity sales.
25% x P400,000 x 80% = P80,000

. Answer: D
May sales billed June 10 250,000x18% P 45,000
June Sales:
Billed June 20 300,000 x 18% 54,000
Billed July 10 300,000 x .80 z .98 235,200
July sales
Billed July 20 P350,000 x .80 x .98 P274,400
July Collections P608,600