ABCDE Company manufactures, among other things, woolen blankets for the athletic teams of the two local

high schools.
The company sews the blankets from fabric and sews on a logo patch purchased from the licensed logo tore site. The
teams are as follows:
 Kings, with black blankets and the Kings logo.
 Queens, with pink blankets and Queens logo.
Also, the pink blankets are slightly larger than the black blankets.
The budgeted direct cost inputs for each product in 2017 are as follows:

Kings Blanket Queens Blanket

Black wool fabric 3 yards 0
Pink wool fabric 0 3.3 yards
Kings logo patches 1 0
Queens logo patches 0 1
Direct manufacturing labor 1.5 hours 2 hours

Unit data pertaining to the direct materials for March 2017 are as follows:

Actual beginning direct materials inventory (3/1/17)

Kings Blanket Queens Blanket

Black wool fabric 30 yards 0
Pink wool fabric 0 10 yards
Kings logo patches 40 0
Queens logo patches 0 55

Target ending direct materials inventory (3/31/17)

Kings Blanket Queens Blanket

Black wool fabric 20 yards 0
Pink wool fabric 0 20 yards
Kings logo patches 20 0
Queens logo patches 0 20

Unit cost data for direct-cost inputs pertaining to February 2017 and March 2017 are as follows:

February 2017 March 2017

Black wool fabric (per yard) P8 P9
Pink wool fabric (per yard) 10 9
Kings logo patches (per patch) 6 6
Queens logo patches (per patch) 5 7
Manufacturing labor cost per hour 25 26

Manufacturing overhead (both variable and fixed) is allocated to each blanket on the basis of budgeted direct
manufacturing labor hours per blanket. The budgeted variable manufacturing overhead rate for March 2017 is P15 per
direct manufacturing labor hour. The budgeted fixed manufacturing overhead for March 2017 is P9,200. Both variable and
fixed manufacturing overhead costs are allocated to each unit of finished goods.

Data relating to finished goods inventory for March 2017 are as follows:

Kings Blanket Queens Blanket

Beginning inventory in units 10 15
Beginning inventory in dollars (cost) P1,210 P2,235
Target ending inventory in units 20 25

Budgeted sales for March 2017 are 120 units of the Kings blankets and 180 units of the Queens blankets. The budgeted
selling prices per unit in March 2017 are P150 for the Kings blankets and P175 for the Queens blankets. Assume the
following in your answer:
 Work in process inventories are negligible and ignored.
 Direct materials inventory and finished goods inventory are costed using the FIFO method.
 Unit costs of direct materials purchased and finished goods are constant in March 2017.

Required:
a. Prepare the following budgets for March 2017
 Revenues budget  Direct manufacturing labor budget
 Production budgets in units  Manufacturing overhead budget
 Direct materials usage budget and direct  Ending inventories budget ( DM and FG)
material purchases budget  Cost of goods sold budget
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b. Suppose ABCDE Company decides to incorporate continuous improvement into its budgeting process. Describe
two areas where it could incorporate continuous improvement into the budget schedules in requirement A.