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The Crown Company is preparing budgets for the quarter ending June 30.

Budgeted sales for the next five months are:

April 20,000 units

May 50,000 units

June 30,000 units

July 25,000 units

August 15,000 units

The selling price is P10 per unit.

SALES BUDGET

MONTH 1

MONTH 2

MONTH3

TOTAL

Sales in units

X selling price (SP)

PRODUCTION BUDGET

The management at Crown Company wants ending inventory to be

equal to 20% of the following month's budgeted sales in units. On March 31,

4,000 units were on hand.

MONTH 1

MONTH 2

MONTH 3

MONTH 4

Budgeted Sales

Add: Desired Ending Inventory

Total units needed

Less: Beg. Inv.

Req. production

Direct materials budget and its cash disbursement budget

At Crown Company, five pounds of materials are required per unit

of product. Management wants materials on hand at the end of each month equal

to 10% of the following month's production. On March 31, 13,000 pounds of

material are on hand. Material cost is P0.40 per pound. One-half of a month's

purchases is paid for in the month of purchase; the other half is paid in the

following month. The March 31 accounts payable balance is P12,000.

MONTH 1

MONTH 2

MONTH 3

TOTAL

Req. production

Mat'ls needed/unit

Total req. mat'ls

Add: Desired E/Inv.

Total mat'ls needed

Less: Beg. Inv.

Mat'ls purchased

X purchase price

Total purchased cost

PAYMENT MADE

Direct labor budget and its cash disbursement budget

At Crown Company, each unit of product requires 0.05 hours (3 minutes) of direct labor. In exchange for the "no layoff" policy, workers agree to a wage rate of P10 per hour regardless of the hours worked (NO overtime pay).

MONTH 1

MONTH 2

MONTH 3

TOTAL

Req. production

Hours needed/unit

Total Hours Req.

X labor rate

Total labor budget cost

Factory overhead budget and its cash disbursement budget.

At Crown Company, manufacturing overhead is applied to units of product on the basis of direct labor hours. The variable manufacturing overhead rate is P20 per direct labor hour. Fixed manufacturing overhead is P50,000 per month and includes P20,000 of noncash costs (primarily depreciation of plant assets).

MONTH 1

MONTH 2

MONTH 3

TOTAL

Req. production

Hours needed/unit

Total Hours Req.

X labor rate

Total labor budget cost

Ending finished goods inventory budget

Production Cost Quantity needed/unit Cost/unit TC/unit

Direct Materials

Direct Labor

FOH

Product Cost per unit

Ending inventory (units)

X unit production cost

Ending Finished Goods

Selling and administrative budget

At Crown Company, the selling and administrative expenses budget

is divided into variable and fixed components. The variable selling and

administrative expenses are P0.50 per unit sold. Fixed selling and

administrative expenses are P70,000 per month. The fixed selling and

administrative expenses include P10,000 in costs - primarily depreciation -

that are not cash outflows of the current month.

MONTH 1

MONTH 2

MONTH 3

TOTAL

Budgeted sales

X VS&A rate

VS&A expenses

Fixed S&A

Total S&A

Less: non-cash costs

Cash disbursement Cash collection budget

All sales are on account. Crown's collection pattern is: 70%

collected in the month of sale, 25% collected in the month following sale, 5%

uncollectible. The March 31 accounts receivable balance of P30,000 will be

collected in full.

Cash budget

The beginning cash balance for March 31 is P350,000. Dividend

declared and paid are: P15,000, P17,000 and P20,000 for the month of April, May

and June, respectively.

Month 1 Month 2 Month 3 Total

Beg. Cash balance

Add: cash collections

Total cash available

ess: cash disbursements

D-Materials

D-Labor

FOH

S&A

Dividend Excess (deficiency)

Add (deduct): Financing

Add: Borrowing Less: Interest

Ending Cash Balance