PRODUCTION BUDGET

AA Inc. has budgeted the sales of its innovative mobile phone over the next four months as follows:

Sales in Units:

July = 30,000

August = 45,000

September = 60,000

October = 50,000

The Company is now in the process of preparing a production budget for the third quarter. Experience has shown that end-of-month inventories of finished goods must equal 10% of next month's sales. The inventory at the end of June was 3,000 units.

Required: production budget for the third quarter showing the number of units to be produced each month and for the quarter in total.

MATERIALS PURCHASE BUDGET

Following the above data, let's say each innovative mobile requires three small 'chips' that cost P200 each and are purchased from an overseas supplier. For this reason, the inventory of chips at the end of the quarter must be equal to 20% of the following month's production needs. Some 36,000 chips will be on hand at the start of the month of July.

Required: materials purchases budget, per month and per quarter in units and pesos.

DIRECT LABOR BUDGET

Let's say that each unit requires 0.40 direct labor-hours and each direct labor-hour workers paid P11 per hour.

Required: direct labor budget.

MANUFACTURING OVERHEAD

The Company's variable manufacturing overhead rate is P1.75 per direct labor-hour and the Company's fixed manufacturing overhead is P35,000 per quarter.

Required: Manufacturing Overhead budget.

SELLING AND ADMINISTRATIVE BUDGET

The Company's variable selling and administrativeexpenses per unit are P2.75. Fixed selling and administrative expenses include advertising expenses of P12,000 per quarter, executive salaries of P40,000 per quarter, and depreciation of P16,000 per month. In addition, the Company will make insurance payments of P6,000 starting the month of August, and property taxed will be paid on September, P6,000.

Required: selling and administrative budget.