Only number 4 and 5. I put the answers to some parts
4. Determine cash flow and other financial effects a. Cash collection schedule b. Cash disbursement for purchases, factory overhead, and selling and administrative expenses C. Cash budget 5. Formulate Projected Financial Statements (As of December 31, 2021) a. Budgeted Cost of Goods Manufactured b. Budgeted Income Statement c. Budgeted Balance Sheet The following are the assumptions to be used: Shrek & Fiona Company Statement of Financial Position As of December 31, 2020 18,000 1,192,000 (22,400) 1,169,600 Current Liabilities Accounts Payable (N2) Taxes Payable Dividends Payable Total Current Liabilities 240,000 13,200 500,000 753,200 Current Assets Cash Accounts Receivable (N1) Less: Uncollectible accounts Inventories Raw Materials (12,000 pounds) Finished Goods (4,000 units) Total Current Assets Non-current Assets Property, plant, and equipment Less: Accumulated depreciation 30,000 140,000 170,000 1,357,600 Stockholder's Equity Common Stock (100,000 shares) Retained Earnings Total Stockholder's Equity 500,000 360,400 860,400 320,000 (64,000) 256,000 Total Assets 1,613,600 Total Liabilities and SHE 1,613,600 N1 2020 3rd quarter sales P2,500,000 2020 4th quarter sales P3,100,000 P 200,000 992,000 P 1,192,000 P N2 2020 3rd quarter purchases P300,000 2020 4th quarter purchases P330,000 75,000 165,000 240,000 P 1. Estimated unit sales for the first quarter of 2021 is 40,000 units and expected to increase 10% quarterly. Selling price fluctuates as follows: Quarter Unit price 1st 64 2nd 66 3rd 62 4th 62 Assume that of each quarter's sales: 20% are cash sales while the remaining 80% are credit sales. Shrek & Fiona Company estimates that 60% of credit sales are collected in the quarter of sale with 2% discount, 30% in the quarter of following sale, 9% in the second quarter following sale and 1% are considered as uncollectible. 2. Finished product requires 3 pounds of direct materials at P2.50 per pound. Finished good ending inventory is equal to 10% of the next quarter sales while raw materials ending inventory is equal to 10% of the next quarter production needs of materials. First quarter of 2022 sales is expected to be at 50,000 units while raw materials ending is at 13,500 pounds. (Units are rounded to the nearest ones.) 3. Each quarter's purchase are paid 50% in that quarter with 5% purchase discount, 25% in the following quarter and the remainder in the second quarter following the purchase. 4. Each finished goods requires 5 direct labor hours with an hourly rate of P4.00 payable on the end of each month. 5. For Factory overhead budget, use the following cost formula: Indirect labor PO.O2 per direct labor worked (same payment scheme with direct labor) Indirect material P2 per unit produced Insurance P48,000 annually, paid at the beginning of the year Factory rent P6,500 per month Utilities P500 per quarter plus PO.50 per unit produced Maintenance P300 per quarter plus PO.30 per unit produced Depreciation 10% of the PPE cost, annually All overhead costs involve cash outlays are paid in the period which they are incurred, Insurance cost.Worthy to note, the company assumes that all indirect materials are used and paid in the month it was purchased. 6. Selling and administrative expenses Advertising P65,000 annually, paid at the beginning of the year Commission 5% of total sales, paid quarterly Admin salaries P100,000 per quarter (same payment scheme with direct labor) Officerent P5,000 per month 7. Income tax is 30%, paid on the first quarter of the following year. 8. For cash budget, assume the following: a. The company desires to maintain P15,000 minimum cash balance b. Dividend is declared every end of the 4th quarter of the year P15 per issued and outstanding share and paid every 206 quarter of the following year C. At the end of the 2" quarter, the company plans to purchase P100,000 worth of equipment. d. Any excess cash at the end of the 1" quarter of the year is used to buy long term investments P10,000 increments. 3% interest rate is credited to the company's bank account at the quarter's end based on original cost of investment e. In case of deficit, the company borrow from the bank P10,000 increments, payable in one year, 10% interest rate is automatically debited to the company's bank account at the end of every quarter. 1.Sales Budget Particulars Units 1st Quarter 2nd Quarter Quarter 4th Quarter 2021 1st quarter Yearly 40000 44000 48400 53240 50000 185640 40000*110% 44000* 110% 48400*110% 64 66 62 62 2560000 2904000 3000800 3300880 11765680 Selling price Sales in amount 2.Production Volume Particulars Sales Add:Closing stock 10% of next quarter sales Less:Opening stock Production 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2021 1st quarter Yearly 40000 44000 48400 53240 50000 185640 4400 4840 5324 5000 13500 5000 4840 5324 4000 40400 4400 44440 5000 58500 4000 186640 48884 52916 3.Manufacturing cost and operating expenses 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2021 1st quarter Yearly 40400 44440 48884 52916 58500 186640 121200 133320 146652 158748 175500 559920 a.Purchases(material) Budget Particulars Production units Raw material required (3 pounds per unit) Add:Closing stock 10% of next month production Less:Opening stock Purchases Purchases in amount (2.5 per pound) 17550 13332 12000 122532 306330 14665.2 13332 134653.2 336633 15874.8 14665.2 147861.6 369654 17550 15874.8 160423.2 401058 17550 12000 565470 1413675 b. Personnel budget Particulars Production Direct labour hrs (5hrs per unit) Direct labour cost (4 per hour) 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2021 1st quarter Yearly 40400 44440 48884 52916 58500 186640 202000 222200 244420 264580 292500 933200 808000 888800 977680 1058320 1170000 3732800 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2021 1st quarter Yearly 4040 4444 4888.4 5291.6 5850 18664 80800 88880 97768 105832 117000 373280 48000 78000 19500 19500 19500 19500 c. Overhead Budget Particulars Indirect labour (0.02 per direct labour hrs) Indirect material (2 per unit produced) Insurance Factory rent(6500 per month) Utilities 500 per quarter plus 0.5 per unit produced Maintenance 300 per quarter plus 0.3 per unit produced Depreciation 10% of ppe cost annually 256000*10%+100000* 10%*2/4 20700 22720 24942 26958 95320 12420 13632 14965.2 16174.8 57192 30600 i.e new machine is purchased at the end of 2nd quarter Total 137460 149176 162063.6 173756.4 122850 701056 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2021 1st quarter Yearly 65000 d.Selling and administrative overhead Particulars Advertising commission 5% of total sales Admin salaries Office rent Total 128000 100000 15000 243000 145200 100000 15000 260200 150040 100000 15000 265040 165044 100000 15000 280044 588284 400000 60000 1113284 4. Determine cash flow and other financial effects a. Cash collection schedule b. Cash disbursement for purchases, factory overhead, and selling and administrative expenses C. Cash budget 5. Formulate Projected Financial Statements (As of December 31, 2021) a. Budgeted Cost of Goods Manufactured b. Budgeted Income Statement c. Budgeted Balance Sheet The following are the assumptions to be used: Shrek & Fiona Company Statement of Financial Position As of December 31, 2020 18,000 1,192,000 (22,400) 1,169,600 Current Liabilities Accounts Payable (N2) Taxes Payable Dividends Payable Total Current Liabilities 240,000 13,200 500,000 753,200 Current Assets Cash Accounts Receivable (N1) Less: Uncollectible accounts Inventories Raw Materials (12,000 pounds) Finished Goods (4,000 units) Total Current Assets Non-current Assets Property, plant, and equipment Less: Accumulated depreciation 30,000 140,000 170,000 1,357,600 Stockholder's Equity Common Stock (100,000 shares) Retained Earnings Total Stockholder's Equity 500,000 360,400 860,400 320,000 (64,000) 256,000 Total Assets 1,613,600 Total Liabilities and SHE 1,613,600 N1 2020 3rd quarter sales P2,500,000 2020 4th quarter sales P3,100,000 P 200,000 992,000 P 1,192,000 P N2 2020 3rd quarter purchases P300,000 2020 4th quarter purchases P330,000 75,000 165,000 240,000 P 1. Estimated unit sales for the first quarter of 2021 is 40,000 units and expected to increase 10% quarterly. Selling price fluctuates as follows: Quarter Unit price 1st 64 2nd 66 3rd 62 4th 62 Assume that of each quarter's sales: 20% are cash sales while the remaining 80% are credit sales. Shrek & Fiona Company estimates that 60% of credit sales are collected in the quarter of sale with 2% discount, 30% in the quarter of following sale, 9% in the second quarter following sale and 1% are considered as uncollectible. 2. Finished product requires 3 pounds of direct materials at P2.50 per pound. Finished good ending inventory is equal to 10% of the next quarter sales while raw materials ending inventory is equal to 10% of the next quarter production needs of materials. First quarter of 2022 sales is expected to be at 50,000 units while raw materials ending is at 13,500 pounds. (Units are rounded to the nearest ones.) 3. Each quarter's purchase are paid 50% in that quarter with 5% purchase discount, 25% in the following quarter and the remainder in the second quarter following the purchase. 4. Each finished goods requires 5 direct labor hours with an hourly rate of P4.00 payable on the end of each month. 5. For Factory overhead budget, use the following cost formula: Indirect labor PO.O2 per direct labor worked (same payment scheme with direct labor) Indirect material P2 per unit produced Insurance P48,000 annually, paid at the beginning of the year Factory rent P6,500 per month Utilities P500 per quarter plus PO.50 per unit produced Maintenance P300 per quarter plus PO.30 per unit produced Depreciation 10% of the PPE cost, annually All overhead costs involve cash outlays are paid in the period which they are incurred, Insurance cost.Worthy to note, the company assumes that all indirect materials are used and paid in the month it was purchased. 6. Selling and administrative expenses Advertising P65,000 annually, paid at the beginning of the year Commission 5% of total sales, paid quarterly Admin salaries P100,000 per quarter (same payment scheme with direct labor) Officerent P5,000 per month 7. Income tax is 30%, paid on the first quarter of the following year. 8. For cash budget, assume the following: a. The company desires to maintain P15,000 minimum cash balance b. Dividend is declared every end of the 4th quarter of the year P15 per issued and outstanding share and paid every 206 quarter of the following year C. At the end of the 2" quarter, the company plans to purchase P100,000 worth of equipment. d. Any excess cash at the end of the 1" quarter of the year is used to buy long term investments P10,000 increments. 3% interest rate is credited to the company's bank account at the quarter's end based on original cost of investment e. In case of deficit, the company borrow from the bank P10,000 increments, payable in one year, 10% interest rate is automatically debited to the company's bank account at the end of every quarter. 1.Sales Budget Particulars Units 1st Quarter 2nd Quarter Quarter 4th Quarter 2021 1st quarter Yearly 40000 44000 48400 53240 50000 185640 40000*110% 44000* 110% 48400*110% 64 66 62 62 2560000 2904000 3000800 3300880 11765680 Selling price Sales in amount 2.Production Volume Particulars Sales Add:Closing stock 10% of next quarter sales Less:Opening stock Production 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2021 1st quarter Yearly 40000 44000 48400 53240 50000 185640 4400 4840 5324 5000 13500 5000 4840 5324 4000 40400 4400 44440 5000 58500 4000 186640 48884 52916 3.Manufacturing cost and operating expenses 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2021 1st quarter Yearly 40400 44440 48884 52916 58500 186640 121200 133320 146652 158748 175500 559920 a.Purchases(material) Budget Particulars Production units Raw material required (3 pounds per unit) Add:Closing stock 10% of next month production Less:Opening stock Purchases Purchases in amount (2.5 per pound) 17550 13332 12000 122532 306330 14665.2 13332 134653.2 336633 15874.8 14665.2 147861.6 369654 17550 15874.8 160423.2 401058 17550 12000 565470 1413675 b. Personnel budget Particulars Production Direct labour hrs (5hrs per unit) Direct labour cost (4 per hour) 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2021 1st quarter Yearly 40400 44440 48884 52916 58500 186640 202000 222200 244420 264580 292500 933200 808000 888800 977680 1058320 1170000 3732800 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2021 1st quarter Yearly 4040 4444 4888.4 5291.6 5850 18664 80800 88880 97768 105832 117000 373280 48000 78000 19500 19500 19500 19500 c. Overhead Budget Particulars Indirect labour (0.02 per direct labour hrs) Indirect material (2 per unit produced) Insurance Factory rent(6500 per month) Utilities 500 per quarter plus 0.5 per unit produced Maintenance 300 per quarter plus 0.3 per unit produced Depreciation 10% of ppe cost annually 256000*10%+100000* 10%*2/4 20700 22720 24942 26958 95320 12420 13632 14965.2 16174.8 57192 30600 i.e new machine is purchased at the end of 2nd quarter Total 137460 149176 162063.6 173756.4 122850 701056 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2021 1st quarter Yearly 65000 d.Selling and administrative overhead Particulars Advertising commission 5% of total sales Admin salaries Office rent Total 128000 100000 15000 243000 145200 100000 15000 260200 150040 100000 15000 265040 165044 100000 15000 280044 588284 400000 60000 1113284
