6. The selling price should be set based on total manufacturing costs with a markup of 100% of said costs considering the management's desired rate of return on investment. The following are the policies and assumptions made by the Board with regards to the cash budget: 1. The stockholders paid P3500000 for their subscriptions upon registration of its business. At the end of 2020, the company purchased on cash manufacturing equipment costing P2,450,000 and ofce furniture and equipment amounting to P695,000. 2. Collection on sales is projected as follows: 70% during the quarter of sale; and the remaining 30% during the next quarter. 3. Payment of raw materials is projected as follows: 60% during the quarter of purchase; and the remaining 40%, during the next quarter. 4. Direct labor is paid in full during the quarter it is incurred. 5. All manufacturing costs and operating expenses, except depreciation, are paid during the quarter when the costs and expenses are incurred. 6. The Company is expected to purchase a delivery vehicle in the 4th quarter at P750300. 7. Income tax rate is at 20% of taxable income and is paid in the succeeding quarter. 8. Cash balance should be at least P300000 in a given quarter. Any deciency should be sourced from the stand by credit line of the company which can be availed in multiple of P100,000 at 12% interest per annum. The loan shall be settled during the quarter when cash is already available provided the minimum cash balance requirement is met