Activity No. 21 Master Budget Computation Furniture Manufacturing Company - School Desk Division Scholastic Furniture Inc. Manufactures a variety of desks, chairs, tables, and shelf units that are sold to public school systems throughout the Philippines. The controller of the company's Desk Division is currently preparing a budget for the third quarter of the year. The following forecast has been made by the division's sales manager. Sales Budget - Sales Price = P600/set July August September + P50,000 P60,000 P75,000 + Based on the information below, complete the spreadsheet to prepare the company's third quarter budget. A. Production. Desired ending inventory (finished sets) is equal to 20% of next month's budgeted sales B. Raw Material Purchases 10 board feet per set Desired ending inventory (board feet) = 10% of next month's use of board feet Cost of raw material purchases = P6.00/board foot C. Direct Labor Budget Direct labor hours per set = 1.5 Direct labor cost per hour - P210.00Activity No. 20: CAPITAL BUDGETING Fermin Company plans to replace its machinery with a new one costing P2,000,000 with an estimated useful life of ten years without scrap value. The old machinery has a book value of P200,000 and can be sold for P150,000. The acquisition of the new machinery will yield an annual cash savings of P450,000 before income tax. Income tax rate is 35%. Required: Compute the following: 1. Net investment on the new machine 2. Net income (after tax) 3. Annual net cash inflows expected from the new machine 4. Payback period 5. Accounting rate of return based on: a. Original investment b. Average investment 6. Net present value, assuming that the minimum desired rate of return is 15% 7. The discounted cash flow rate of return 8. Present value payback 9. Profitability index 10. Payback reciprocal