DEF Company budgets sales at P2,000,000 and expects a net income before tax of 10% of the sales. Expenses are estimated as follows:
Selling    15% of sales
Administrative         9% of sales
Finance    1% of sales

Labor is expected to be 40% of the total manufacturing cost. Factory overhead is to be applied at 75% of direct labor cost.

Inventories are to be as follows:
                                                  January 1  December 31
Materials             250,000        300,000
Work in process    200,000        320,000
Finished goods     350,000         400,000

1. Materials purchases will be:

2. Cost of goods sold will be:

3. Factory overhead will amount to:

4. Total manufacturing cost will be:

GHI Company is preparing a flexible budget for 20X3 and the following maximum capacity estimates for department M are available:
                                            At Maximum Capacity
Direct labor hours   60,000
Variable factory overhead  P150,000
Fixed factory overhead  P240,000

 Assume that Dean's normal capacity is 80% of maximum capacity. What would be the total factory overhead rate, based on direct-labor hours, in flexible budget at normal capacity?