Problem 16 (Minimum Cash Requirement): Gapan Corporation had cash of P13,000 on hand on January 1. For the coming year, the company expected the following cash collections from customers by quarter. First Second Third Fourth Cash Collections P110,000 P177,500 P183,700 P136,000 Direct materials purchases, which are paid in the same quarter of purchase, were budgeted as follows: First Second Third Fourth Direct materials purchases P65,000 P75,000 P55,000 P50.000 The production budget showed the following unit production by quarter with an average labor rate of P40.00: First Second Third Fourth Units to be produced 1.500 2,000 1,700 1.500 Gapan planned to pay dividends of P10,000 per quarter during the year. During July, new equipment costing P60,000 will be purchased. An additional P16,000 was planned to installation costs during the fourth quarter. The company was required to maintain a minimum cash balance of P15,000. A line of credit was available for short-term borrowings in increments of P1,000. All borrowings will be made at the beginning of a quarter and repaid at the end of a quarter. Interest on the short-term borrowings will be paid at 0.5% per quarter on the amount repaid in any quarter 5 | Module 2: Budgeting and Forecastingwhen a loan repayment is made. All other interest expense will be accrued each quarter. Required: Prepare a cash budget by quarter and for the year in total. Problem 17 (Cash Budget): Tagaytay Corporation is to start production on 1st January of the coming year. The prime cost of a unit is expected to be P40 (P16 per materials and P24 for labor). In addition, variable expenses per unit are expected to be PS and fixed expenses per month P30,000. Payment for materials is to be made in the month following the purchase. One-third of sales will be for cash and the rest on credit for settlement in the following month. Expenses are payable in the month in which they are incurred. The selling price is fixed at P80 per unit. The number of units to be produced and sold is expected to be January 900 February 1,200 March 1,800 April 2,000 May 2,100 June 2.400 Required: Draw a Cash Budget indicating cash requirements from month to month considering that the Tagaytay will begin its operation with P40,000 in cash Problem 18 (Forecasting): Suppose that the value of one dollar compared to the peso grew as follows: Year Value of $1 Year Value of $1 in peso in peso P 7.50 P18.00 7.50 25.50 3.00 7 20.00 14.00 Required: 1. Using the naive method, forecast the value of one dollar for years 5 to 8. 2. Using year 1 to 5 in deriving the formula, forecast the value of one dollar for years 5 to 8 using the trend projection method 3. Forecast the value of one dollar in years 5 to 8 using a 3-year moving average. Show moving 2-year weighted average forecasts from years 4 to S. 5. Using exponential smoothing with an a = .4 and suppose that previous forecast in year 1 was P8.50, indicate the forecast from year 2 to 8