Budgeting-Activity
.pdf
School
Catanduanes State University-Virac**We aren't endorsed by this school
Course
BSA 101
Subject
Accounting
Date
Dec 17, 2024
Pages
2
Uploaded by KidStar262110
BudgeƟng - AcƟvity Problem 1 Alpha Company has forecast the following sales for the first seven months of the year: January P120,000 February 160,000 March 180,000 April 240,000 May 120,000 June 200,000 July 220,000 Monthly material purchases are set equal to 20% of forecasted sales for the next month. Of the total material costs, 40% are paid in the month of purchase and 60% in the following month. Labor costs will run P60,000 per month, and fixed overhead is P30,000 per month. Interest payments on the debt will be P45,000 for both March and June. Finally, Alpha’s sales force will receive a 3% commission on total sales for the first six months of the year, to be paid on June 30. Required: i.How much will be paid in the month of January for the purchase of materials? ii.How much does Alpha plan to disburse in the month of June? Problem 2Barney Company’s actual and forecasted sales and purchases are shown below: Sales Purchases April (actual) 390,000 200,000 May (actual) 420,0000 220,000 June (forecast) 390,000 210,000 July (forecast) 350,000 240,000 August (forecast) 420,000 320,000 September (forecast) 410,000 230,000 The company makes 10 percent of its sales for cash and 90 percent on credit. Of the credit sales, 30 percent are collected in the month aŌer the sale and 70 percent are collected two months aŌer. Barney pays for 45 percent of its purchases in the month aŌer purchase and 55 percent two months aŌer. Labor expenses equal 15 percent of the current month’s sales. General overhead expenses equal P10,000 per month. Interest payments of P35,000 are due in June and September. A cash dividend of P25,000 is scheduled to be paid in June. Tax payments of P30,000 are due in June and September. There is a scheduled purchase for cash of an equipment, P290,000, in September. Barney’s ending cash balance in May is P25,000. The minimum desired cash balance is P20,000. The maximum desired cash balance is P50,000. Excess cash (above P50,000) is used to buy marketable
securiƟes. Marketable securiƟes are sold before borrowing funds in case of a cash shorƞall (less than P20,000). Required: i.During the month of June, Barney expects to receive cash from sales amounƟng to: ii.The cumulaƟve amount of marketable securiƟes purchased as of July 31 amounts to: iii.The amount of loan to be obtained to maintain a balance of P50,000 cash as of September 30 will be: