PROBLEM SOLVING (SHOW YOUR COMPUTATIONS AND SOLUTION)

1. Betzy Company's sales budget shows the following projections for next year:

		Sales in units
	First Quarter......................	60,000
	Second Quarter.................	80,000
	Third Quarter.....................	45,000
	Fourth Quarter...................	55,000

Inventory at the beginning of the year was 18,000 units. The finished goods inventory at the end of each quarter is to equal 30% of the next quarter's budgeted unit sales.

1) How many units should be produced during the first quarter?

B. On January 1, Barnes Company has 8,000 units of Product A on hand. During the year, Barnes

company plans to sell 30,000 units of Product A, and plans to have 6,500 units on hand at year end.

2. How many units of Product A must be produced during the year?

C. Garry Manufacturing Corporation's most recent production budget indicates the following required production:

		October	November	December
	Required production (units)...........................	210,000	175,000	110,000

Required materials (units) ? ? ?

Each unit of finished product requires 5 pounds of raw materials. The company maintains raw materials inventory equal to 25% of the next month's expected production needs.

3) How many pounds of raw material should Garry plan on purchasing for the month of November? Solve first for the materials required each month based on production need.

D. Traverse Company manufactures and sells women's skirts. Each skirt (unit) requires 2.5 yards of cloth. Selected data from Traverse's master budget for next quarter are shown below:

		July	August	September
	Budgeted sales (in units)...............	6,000	8,000	9,000
	Budgeted production (in units).....	8,000	10,500	12,000

Each unit requires 1.5 hours of direct labor, and the average hourly cost of Traverse's direct labor is P10.

4) What is the cost of Traverse Company's direct labor in September?

E. Haylock Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 5,600 direct labor-hours will be required in August. The variable overhead rate is P5.40 per direct labor-hour. The company's budgeted fixed manufacturing overhead is P69,440 per month, which includes depreciation of P15,680. All other fixed manufacturing overhead costs represent current cash flows.

5) What should be the amount of cash disbursement budget for August for manufacturing?

F. Shepherd Inc. bases its selling and administrative expense budget on budgeted unit sales. The sales budget shows 1,300 units are planned to be sold in March. The variable selling and administrative expense is P4.20 per unit sales. The budgeted fixed selling and administrative expense is P19,240 per month, which includes depreciation of P3,380 per month. The remainder of the fixed selling and administrative expense represents current cash flows.

6) What is the total cash disbursements for selling and administrative expenses on the March selling and administrative expense budget?

G. Sharskin Company collects 30% of a month's sales in the month of sale and 70% in the month following sale. Budgeted sales for the next four months are:

		January	February	March	April
	Budgeted sales...........	P200,000	P300,000	P350,000	P250,000

7. How much are the budgeted cash collections in March?
8. What about in April?

H. Given the following required production of Alexis Food Corp , material requirement is 3 pounds per product and the purchase cost is P10. The company is using the Lean Production strategy and buys only stock good for production needs for cost efficiency. Half of the purchases is paid in the month of purchase and half in the following month.

		October	November	December
	Required production (units)...........................	210,000	250,000	300,000

Required materials (units) ? ? ?

9. How much is the cash disbursement budget for purchases in the month of November?

10. What about in the month of December?