Master Budget

a) Sales Budget
Unit To Sell ( Units Produced - Finished Goods Inventory )
Selling Price ( Product Cost + Mark Up)

Exer # 1 Beefy Dog Treats

Sales Budget January February March April
Unit to sell 5000 9000 10,800 12,960
Selling Price 3 3 3 3
Budgeted Sales 15000 27000 32,400 38,880
Increase by 20%
Exer # 2

July August September October Assumption

Cash Sales 15,000 18300 22,326 25,675 15% Increase
Credit Sales 10,000 13000 16,900 21,125 25% Increase
Total Budgeted Sales 25,000 31,300 39,226 46,800

Ex 3 Ex 4 Ex 5
Budgeted sales 23000 2650 76500
+Desired Ending Inventory 18000 900 19500
Total units needed 41000 3550 96000
-Beginning Inventory 15000 850 21000
Units to produce/ purchase 26000 2700 75000

Exercise to connect Sales and Production Budget

Dec Jan Feb Mar

Units to sell 5000 7000 9000 12000
Selling Price = P 30
Desired ending inventory = 10% of the previous month unit to sell
40% 29% 33% 34% 34% 34%
Sales Budget Dec Jan Feb Mar Apr May June
Unit to sell 5000 7000 9000 12000 16080 21547 28873
Selling Price 30 30 30 30 30 30 30
Budgeted Sales 150,000 210,000 270,000 360,000 482,400 646,416 866,190

Production budget
Unit to sell 5,000 7,000 9,000 12,000 16,080 21,547 28,873
+Desired Ending Inventory 0 500 700 900 1,200 1,608 2,155
Total units needed 5,000 7,500 9,700 12,900 17,280 23,155 31,028
-Beginning Inventory 0 0 500 700 900 1,200 1,608
Units to produce 5,000 7,500 9,200 12,200 16,380 21,955 29,420
Direct Materials Budget - Wood
Assumption = Desired ending inventory = 5% of the current month unit to produce
Cost of wood / unit = P50

Units to produce 7,500 9,200

+Desired Ending Inventory 375 460
Total units needed 7,875 9,660
-Beginning Inventory 0 375
Materials to purchase 7,875 9,285
X Cost of Material/unit 50 50
Total material cost 393,750 464,250

Direct Materials Budget - Metal

Assumption = Desired ending inventory = 5% of the current month unit to produce
Cost of metal / unit = P75

Units to produce 7,500 9,200

+Desired Ending Inventory 375 460
Total units needed 7,875 9,660
-Beginning Inventory 0 375
Materials to purchase 7,875 9,285
X Cost of Material/unit 75 75
Total material cost 590,625 696,375

Direct Labor Budget

Units to produce 7,500 9,200
x Required Hrs/ unit 0.50 0.50 ( half an hour / 1 hour )
Total Hrs Needed 3,750 4,600
X Cost / Hr 61.375 61.375 based on P491 min wage
Direct Labor Cost 230,156 282,325

Factory Overhead Budget

Units to Produce 7,500 9,200
Variable O/H
Indirect Materials = P .25/unit 1875
Indirect Labor = P .50/unit 3750
Utilities = P .10/unit 750
Total Variable FOH 6375

Fixed FOH
Depreciation - Machinery 10,000
Insurance - Factory 5,000
Property Tax - Factory 3,500
Total Fixed FOH 18,500
Total Factory Overhead 24,875

Product Cost
Direct Materials 984,375
Direct Labor 230,156
Factory Overhead 24,875
Total Production Cost 1,239,406
# of Units Produced 7,500 9,200
Product Cost 165.25

Selling Price
Product Cost 165.25
Add : Mark Up 150% 247.90 (P165.25 x 150%)
Selling Price 413.15

Exercise 6
Sales
Payroll Budget June July June July
Basic amount 3600 3600 160,000 180,000
+ Percentage of sales 9600 10800 6%
Total payroll 13200 14400

Operating Budget July

Payroll 14400
Depreciation 1000
Insurance 600
Office and Admin Exp 9500 ( 10% of purchased inventory)
Total operating expense 25500

Exercise 7
August September October November
Sales 300,000 280,000 330,000 260,000

Months 1 2 3
Terms 30% 55% 10%

Cash Collections August September October November

August Sales 90,000 165,000 30,000
September Sales 84,000 154,000 28,000
November Sales 99,000 181,500
December Sales 78,000
Cash Collections 90,000 249,000 283,000 287,500
Exercise 8

Budgeted Cash Receipt 84,000

Less : Budgeted Cash Disbursement 72,000
Net Change in Cash 12,000
add: Beginning Balance 14,000
Budgeted Cash Balance 26,000
Desired Cash Balance 40,000
Deficiency in Cash (14,000)

Exercise 9
October November
Sales 180,000 216000 (20% higher than October)

Collections :
35% - month of sale 63,000 108,000
60 %- next month 75,600
Total Collections 183,600

Purchases 110,000 160,000

Payments
40% - month of sale 44,000 64,000
60% - next month 96,000
Total payments 160,000

Net Change in Cash 23,600

Add : November 1 cash balance 13,500
November 30 cash balance 37,100
Prob # 1
July August September
Cash Sales 25,000 32,500 42,250 increase by 30%
Credit Sales 40,000 50,000 62,500 increase by 25%
Total Budgeted Sales 65,000 82,500 104,750

Prob # 2
KITZ KATZ
Units to sell 20,000 15,000
Selling price 15 12
Total Sales 300,000 180,000

Problem # 3
Budgeted sales 23,000
+Desired Ending Inventory 18,000
Total units needed 41,000
-Beginning Inventory 15,000
Units to produce 26,000
Problem # 4
a)Sales Budget d) Labor Budget
Units to sell 2,650 Units to produce 2,700
Selling price 15 X Manhours Needed 0.5
Total Sales 39,750 Total Labor required 1,350
X Cost of labor 5
b) Production Budget Labor Budget 6,750
Budgeted sales 2,650
+Desired Ending Inventory 900 e) Factory Overhead Budget
Total units needed 3,550 Units to Produce 2,700
-Beginning Inventory 850 Variable Overhead 0.75
Units to produce 2,700 TotaL Variable Overhead 2,025
Add : Fixed Cost 1,750
c) Material Budget Total Factory Overhead 3,775

Units to produce 2,700 f) Material Budget 7,425

Qty Required to produce 5 liters Labor Budget 6,750
Total Materials Needed 13,500 Factory Overhead Budget 3,775
+ Desired Ending Inventory 1,350 10% Total Product Cost 17,950
- Beginning Inventory 0 Units Produced 2,700
Total Materials to Purchase 14,850 Product cost / unit 6.65
X Cost of Material 0.50 per liter
Material Budget 7,425 g) Sales 39,750
Less : Cost of Sales 17,618
Gross Profit 22,132

Cost of Sales :

Total Product Cost 17,950

Add : Beginning Invty 5,651 ( 850 x 6.65 )
Less : Ending Invty (5,983) (900 x 6.65)
Cost of Sales 17,618