University Master Budget Template, Study Guides, Projects, Research of Financial Management

Download University Master Budget Template and more Study Guides, Projects, Research Financial Management in PDF only on Docsity! MASTER BUDGET BILL INT frerce (2B APPROACHES recznal! aa i ee Tee a es ; | ID : : Ee | B = = RESOURCES PROJECT wal on ee Se {COMPANIES a OPERATION Ole MEE AE = wep FUTURE PERIOD Budget is for future period The Accounting The Accounting Department Department has a- total has a total of budget of Php budget of Php 1.2 million. 1.2 million Instead of... Should be... USES OF BUDGETING =» Planning (Long-term or short-term) « Communication and Coordination » Cost Control s Profit motivation » Performance Evaluation » Legal and Contractual Requirements MASTER BUDGET MASTER BUDGET SALES BUDGET » Starting point in master budget » Other budgets are dependent upon the sales budget SALES FORECASTING » Is affected by unit sales price and quantity sold »Is affected by market conditions, demand and supply = Is affected by economic environment Methods In Sales Forecasting = Statistical forecasting = Internal estimates ILLUSTRATION 2 » Using the correlation analysis, effective 2020, there will be no more demands for their products because of the new law enacted by Congress. 2013 meee) pene! 1,050 2015 iol: 2016 1,158 2017 1,216 2018 1,276 2019 Pelle 2020 ry ILLUSTRATION 3 » After the May 2022 elections, the Philippines may be entering into three (3) state economic conditions: strong (60%), fair (30%) and weak (10%). Economy Projected No. of Units Probability Strong Erne 60% zig 70,000 ETO 4 Weak 30,000 ey A. B. Cc Budgeted unit selling price is Php 120. 2% of gross sales is estimated to impaired or doubtful in collection Compute for the following: Budgeted units Budgeted sales NRV of budgeted sales eRe aE UO) NE: «» Atlanta has projected cost of sales for January 2021 of Php 1,500,000. Of this amount, Php 80,000 represents fixed overhead costs. Total variable costs each month is 70% of sales. The Company’s cost of sales is 60%. The Company generates net income equal to 15% of te] (=e =» What is the expected sales in January? ANSWER TO ILLUSTRATION 4 Projected cost of sales 1,500,000.00 Divided by COS/SALES ratio 60% Projected Sales 2,500,000.00 PRODUCTION BUDGET =» The second budget to prepare after the sales budget. » It determines how many units to produce =» Types and quantity of inventories are determined «» Desired inventory level are considered UNITS TO PRODUCE / PRODUC TION si0 Spiel = No. of units to be sold Add: Desired ending inventory Total units needed during production Less: Beginning FG inventory Units to be produced ILLUSTRATION 5 » Assume that you are given the following sales budget (in units) during the year. Pl iP LI December January February March ray a1 Sales budget 1,800 2,000 2,200 2,420 ye) ty! » How many units to produce during the 1* quarter of 2020 if the Company desires to have 30% of the next month’s sales as ending inventory. ANSWER TO ILLUSTRATION 5 2020 January February March Sales in units 2,000 2,200 2,420 Ending inventory 660 726 val Total units needed 2,660 2,926 Cav ace Less: beginning inventory 600 660 726 Units to produce 2,060 2,266 2,265 Peary the c Se mle re _ requirements. (direct material) ; Raw materials, ee xm ‘ Add: Purchases xxx in Raw material available for use xxx Less: Raw materials, ending <x m= Raw materials used «> » How many direct material materials are needed to purchase? COMPUTATION FOR PURCHASES BUDGET Units to be produced Multiply: No. of materials/pounds/kilos Total materials needed in pounds/kilos Add: Desired RM ending inventory Less: Beginning RM inventory Total materials in pounds/kilos/to purchase Multiply: Price per kilo / pound Total material purchases in peso/dollar COMPUTATION FOR PURCHASES BUDGET Units to be produced Multiply: No. of materials/pounds/kilos Total materials needed in pounds/kilos Add: Desired RM ending inventory Less: Beginning RM inventory Total materials in pounds/kilos/to purchase Multiply: Price per kilo / pound Total material purchases in peso/dollar  MATERIAL AA 2016 Material AA January February March TOTAL Units to produce 2,120 2,266 2,565 6,951 § Material AA needed 2 2 2 20 Total AA materials needed 4,240 4,532 5,130 i 13,902 Add: Desired ending RM 453 513 598 598 Less: Beginning RM 424 453 513 424 Total AA materials to purchase 4,269 4,592 5,215 14,076 Multiply by price per kilo 20.00 20.00 20.00 20 Purchases budget 85,384.00 91,836.80 104,306.40 281,527.20  2016 Material BB January February March TOTAL |} Units to produce 2,120 2,266 2,565 6,951 a Material BB needed 1.5 15 15 15 Total AA materials needed 3,180 3,399 3,848 f 10,427 Add: Desired ending RM 340 385 448 448 Less: Beginning RM 318 340 385 318 Total BB materials to purchase 3,202 3,444 3,911 10,557 Multiply by price per kilo 15.00 15.00 15.00 15 Purchases budget 48,028.50 51,658.20 58,672.35 158,359.05  MATERIAL CC 2016 | Material CC January February March TOTAL Units to produce 2,120 2,266 2,565 6,951 wee Viaterial CC needed 1 1 1 1 Total CC materials needed 2,120 2,266 2,565 tr 6,951 Add: Desired ending RM 227 257 299 299 Less: Beginning RM 212 227 25/ 212 Total CC materials to purchase 2,135 2,296 2,608 7,038 Multiply by price per kilo 10.00 10.00 10.00 10 Purchases budget 21,346.00 22,959.20 _ 26,076.60 70,381.80 ANSWER TO ILLUSTRATION 8 Total units to produce Material B Total Maternal B needed (gallons) Add: Ending RM Material A Less: Beginnning RM Material B Total Material A to purchase (Ibs) Purchase price Budgeted purchase of Material A TOTAL PURCHASES Brit a ace) BIT pepe. tt) 0.75 886,500 70,000 (90,000) ps tel opel t#) 1.80 1,559,700 10,499,700 July to December Total pm tbt) 2,670,000 0.75 0.75 1,116,000 2,002,500 76,000 Peon Ute (70,000) (90,000) 1,122,000 ges 353 ot) 8) 1.80 1.80 VOR Bot 8) 3,579,300 14,564,600 23,714,300 DIRECT LABOR BUDGET » Standard hours of labor needed to produce the units in the production budget. » Budgeted labor costs are computed considered the _ different type of workers. CT LABOR BU DG C =i Units to be produced Multiply: Standard hours allowed Total hours allowed Multiply: Average wage rate Budgeted direct labor cost  ANSWER TO ILLUSTRATION 9 Sales budget 135,000 Ending inventory 18,000 Total production needs 153,000 r Beginning inventory (14,000) Units to produce 139,000 No. of hours Total no. of hours VOH rate Total VOH Total FOH Total Budgeted OH ENDING FINISHED GOODS BUDGET =» Supplies information needed for the balance sheet and cost of goods sold. a Unit cost must be determined  ILLUSTRATION 10 is sears Apa etek 5 NaN ae | Soe RD 67 airs in ending invento a 0 have 5 ch a ava a ean ee ig a a a an Pecan a ere ee Le ee Per Chair Direct materials Php 14 Direct labor hours 1.9 DLH at Php 16/DL VOH Php 1.2 per DL FOH Php 1.6 per DL =» Compute for unit cost and ending FG