Course Code: Financlal Managomont ‘Student Activity Sheet Module #11 Name: Chva, Welaine Lois A Class number: Section: @1-288-10___ Schedule: Date: September 12, 2041 —$$—— Lesson title: FINANCIAL PLANNING AND BUDGETING (CONT) Materials: Lesson Objectives: SAS Alt the end of this module, | should be able to References: 1. prepare the sales budget, production budget, materials Timbang, FL. (2015). Purchases budget and direct labour budget Financial Management, Part 2. explain their importance 4. Quezon Ciy: C & E Publishing, Inc. Managerial Accounting: The Comerstone of Business Decisions, 4e. by Mowen, M. and Hansen D. (2012) Productivity Tip: Schedule doing practice drils similar to the ones in this module two more times this week. Spacing your practice time will help you master the process! A. LESSON PREVIEW/REVIEW 4) Introduction In preparing an operating budget, which do you think comes first between sales budget and production budget? What makes you say so? In this module, we will learn about some of the components or supporting schedules of an operating budget. We will get to learn as well their functions in the overall budgeting process. By knowing and preparing them, we will get to know how important they are and their accuracy. 2). Activity 1: What | Know Chart, part 4 (3 mins) ‘Do you know anything about an operating budget? Try answering the questions below by writing your ideas under the first column What / Know. I's okay if you write key words or phrases that you think are related to the questions. mo Page 1/9Pinsnta tDUCATION “enn Course Code: Financial Management ‘Studont Activity Sheet Module #14 Name: number Section: ‘Schedule: Date {What iKnow ‘Questions: - 3d (Actvity 4) |) Hite the mai ‘= limahon ¥7] What is a | | \ 7 ‘sales budget? the waged wee | sales Tors he Iareul yee 9 su fs eapaga vie vat i calcio iW Gwe do OS ASS issn ih Ge a RA Hed o you define a production (Theat Cadel at leaner the |p eee a oadgcl MeL ar aes aig ‘Are sales budget and production es. are tre ding Beta budget related? In what way? ites BMAIN LESSON ia ® polse so 1) Activity 2: Content Notes ‘approved by the budget committee and describes expected sales in units and | sales budget pesos the basis for all of the other operating budgets and most of the financial budgets | first step includes making the sales forecast production tells how many units mustbe produced to mest sales needs and to salisty ending | budget inventory requirements | |» tocompute, | | Units to be produced = Expected unit sales + Units in desired ending inventory (El) — Units in beginning inventory (BI) | v viv v direct > tells the amount and cost of raw materials to be purchased in each time penod materials > to compute, purchases | Purchases = direct materials needed for production + direct materials in desired end ing | budget __| inventory — direct materials in beginning inventory | direct > shows the total direct labor hours and the direct labor cost needed for the num labour of units in the production budget | budget + aswith direct materials, the budgeted hours of direct labor are determined by the | j relationship between labor and output _ a) Peter CNET - Page 219re Course Code: Financial Management ‘Student Activity Sheet Module #11 Name: Class number: Section: _ Schedule Date: Activity 3: Skill-building Activities Let's practice! To assess what you have read in advance, answer the exercises thal follow. After completing each exercise you may refer to tho Key to Corrections for feedback. Try to complete each exercise befcre looking al the feedback, Exercise 1 Camia s Welgets plans to sell 22,000, 19,000, 18,000 and 20,000 units, respectively, in each quarter of 2019. Selling Price is P2.00 per unit. Prepare a sales budget for each quarter and for the year Exercise 2 the sa’es estimates for the first four months of 2019 are as follows January 20,000 units February 30,000 March 45,000 Apnl 50,000 ‘There are 5,000 unts on hand as of January 1, 2019. Ithas been the practice of the company to maintain its stock at 20% of the succeeding month's estimated sales volume. Prepare a production budget for the first three months of 2014, Exercise 3 Jones Corporaton has the following budgeted sales for the selected six-month period: Month Unt Sales June 15,000 July 20,000 August 35,000 September 25,000 October 30,000 November 20,000 ‘There were 7.500 units of finished goods in inventory at the beginning of June. Plans are to have an inventory of finistied product equal to 20 percent of the unit sales for the next month. Wdocmen ste open OO PENMMA EDUCATION Page 3|9Course Codo: Financial Management Student Activity Sheot Modulo #14 Name: Class number: Section; Schedule: Date: Three Pounds of materials are required for each unt produced. Each pound of material costs P20. ventory levels for materials equal 30 percent of the needs for the next month. Materials inventory ‘on June 1 was 5,000 pounds, Prepare a purchases budget in pounds and pesos for July, August, and September. 2) Activity 4: What | Know Chart, part 2 Wstime to answer the questions in the What | Know chart in Activity 1. Log in your answers in the table, 3) Activity 5: Check for Understanding (Graded Summative Test) Choose the letter of your answer for each item, B 1. The planned ending cash balance for the year appears on which of the following statements? a. budgeted income statement b. budgeted balance sheet ©. production budget d, budgeted cash receipts e. budgeted cash disbursements D 2. Which of the following is true of the master kudget? 2. Monthly budgets are derived by dividing the master budget by 12 b. Fixed costs cannot change from one month to another cc. Variable costs cannot change from one month to another d. The master budget can reflect seasonal effects e. None of these AA 3. In budgeting direct labor hours for the coming year, itis important to: divide production in units by the direct Iabor hours per unit 3 a. multiply production in units by the direct labor hours per uni b subtract production in units from the direct labor hours per unit. Wace ne peer oO PNM EDUCATION Page 4/9PHINMA EDUCATI eee Course Code: Financial Management Student Activity Sheet Module #11 Name: Cass number: Section: Schedule ae d, ‘Subtract direct labor hours per unit from production in units. © muttiply production in units by the labor wage rate. © - Which of the following appears on the budgeted balance sheet? estimated sales 4 a b. estimated cost of goods sold ©. estimated ending accounts receivable d. estimated fixed selling expense © estimated fixed factory overhead A production budget is most important for which of the following? retail stores, manufacturing firms Not for profit agencies local government agencies allof these eaesag D 6. The is the person responsible for directing and coordinating the organization's overall budget process budget master controller chief financial planner budget director chief accountant pacge 7. Budgets are prepared in which of the following orders? a. production budget, sales budget, direct labor budget b. production budget, cost of goods sold budget, direct labor budget cc. sales budget, cash budget, production budget d. sales budget, production budget, direct materials purchases budget . production budget, cash budget, direct materials purchases budget Weccnen eh pere OPA ECC NOt Page 5|92 me ereeememener Course Code: Financial Management Student Activity Sheet Module #11 Name Class number Section: Schedule Date © 8 Which of the following statements is true? The production budget is the first budget to be prepared in the master budget The cash budget is prepared before the direct matenals purchases budget The budgeted balance sheet is prepared after the cash budget Service fms need not prepare a master budget. The cost of goods sold budget is prepared before the direct labor and everhead budgets eange Oo Which of the following is not true? a. The sales forecast is done before the sales budget. b. The master budget is the comprehensive plan for the organization as a whole ©. The production budget is prepared in units and pesos d. One approach to forecasting sales is the bottom up approach. €. _ Increating the sales forecast, outside factors such as the state of the economy, should be considered. B 10. Acompany has provided a sales budget for the next four months (January, February, March and April) It bases its production budget cn the sales budget, and has a policy that each month's ending inventory of finished product must be equal to 25% of the following month's sales needs. The direct materials purchases budget is based on the production budget The company’s pobcy for each month's ending inventory of raw matenals is that they must be equal to 10% of the following month's production needs for raw materials. Given this informaton, the company can prepare direct materials purchases budgets for how many months? One Two Three Four Five Teneo MA EDUCATION Page 619Crerane | Comer midges nus Bedgety Far me gta ended Deatmter By MIA Geert Tots a ra = ur Fz, 000 P Moto Proce #2000 tune Feng price wR wP2 af wy +P? negched saks P 300e Pgu,000 rod 156,009 trertive 2 ; cams widgets sols Budgets For the gear cnded feumoer 31, 204 Merch Sans in yas 20,000 30,000 95,000 Desired erding ue 00 10,000 pera 14,000 94000 55,000 Totor Weds a wae? 4000 655: Beg. beer yats toe podeceq | 2000 000 16,400 pon 0 preven widget Me fis! throats tramy lovely Jonvery 0,000 £20 > G, 000 ‘lo = 10 sag verry enya AVTe = 08 ame 7 ch (501000 ¥ 20% 7 10,000 Eoang etry Mer M August september ne 3 a 3 100 34,000 = units to ve produced 2 1,400 1s, U0 uv “an , 74,000 in oesed eng, " 44,400 = prdvdion needs inayat 103,200 ’ 4,10 otal needs 4,1! 23,400 seat: Beg: Meaty wa atl aaa a7! purchares nuded in los at re rao Mo os oo D 954,000 P 1,54 ra porchaye cat Pysuoste — ——Name: Section: Schedule: ©. LESSON WRAP-UP 1) Activity 6: Thinking about Learning PINALA EDUCATION Course Code: ‘Student Activity Sheet Module #11 inanclal Management Class number: Date: Congratulations for finishing this module! Shade the number of the module that you finished. You are done with the session! Lets track your progress. [Pena eid? Period 3 PPPEEE 2 eRe as] [spe [a] 3) [=] [>[ | sop Did you have challenges learning the concepts in this module? If none, which parts of the module heined you learn the concepts? Yes had challenges in tearing the donuphs ‘Some question/s | want to ask my teacher about this module is/are: hone 0 far, FAQ 1. Are budgets always fixed? budget committee. KEY TO CORRECTIONS Answers to Skill-Building Exercises Exercise 1 = Camia’s Widgets Sales budgets For the year ended December 31, 2019 { ‘Quarter = Oftentimes, budgets are flexible. They are based on estimates and can be adjusted by the ee een Page 7|9| l ne Course Code: Finanelat Management Student Activity Sheet Module #11 Class sunber Section _ _ Date 1 q2 Year } Lis | P22,000 ~ 79,000 Selling x P2 yP2 xP? | price | | Budgeted | 44,000 | P38,000 P158.68 sales. | | Exercise 2 Camia’s Widgets Sales budgets = : For the year ended December 31, 2019 { a ~ [February [March > ‘Sales in units | 20, i nae 745,000 - | Desired ending | 6,000 ~~ 110,000 | inventory i ae — ! | Totalneeds ‘| 26,000 __ | 55,000 i [Less beginning | 5,000 79.000 inventory kr | | Units tobe | 21,000 | 46,000 produced Le ol | Solution Ending mventory January 30,000 x 20% = 6,000 Ending ventory February 45,000 x 20% = 9,000 Ending mventory March 50,000 x 20% = 10.000 Exercise 3 oo Te — —-+ duty — ; September, Units to be produced —_ | 23.000" "33,000"! 26,000 : {—__t t Desired ending inventor | 29,700 {23.400 __| 25,200"* Production needs™* 69.000 “| __99'000 '_78.000 Peer eee EDUC On Page’Course Code: Financial Management Student Activity Sheet Module #11 Name: Class number Section: Schedule’ Dete: Total needs 98,700 722,400 [103,200] Less: Beginning inventory 20,700 29,700 23,400 ' Purchases needed in Ibs. 78,000 | $2,700 79,800 Cost (P20 per Ib.) o P20 [9 P20 | o P20 Total purchase cost 1,560,000 [P1.854,000 [/P1,596,000 0.30 times nex: month's needs * (30,000 + 4,000 - 6,000) x P3 x0.30 3'Ibs. times units to be produced Medecumente ine propeny Ol Page 919