BARACOSO, JOEANN D.

BSBA IV-2

ACCOUNTING 5 FINAL EXAM

Question:

1. Baracoso Company estimates that 2020 sales will be Php190,000 in quarter 1, Php185,000 in
quarter 2, and Php210,000 in quarter 3. Cost of goods sold is 84% of sales. Management desires
to have ending finished goods inventory equal to 17% of the next quarter’s expected cost of
goods sold. Prepare a merchandise purchases budget by quarter for the first six months of
2020.

Ans.

BARACOSO COMPANY
Merchandise Purchases Budget
For the Month Ended June 30,2020

Budget cost of goods sold (P 190,000 x 84%) P159,600

Add. Desired ending merchandise inventory (155,400 x 17%) 26,418
Total. P186,018
Less. Beginning merchandise inventory (P 159,600 x 17%) 27,132
Required merchandise purchase for June. P158,886
2. Baracoso company expects to produce 5,000 units of product ABC during the current month.
Budgeted variable manufacturing cost per unit are direct materials Php 6.80 ,direct labor Php
16.60 and Overhead Php 24.90. Monthly budgeted fixed manufacturing Overhead costs are Php
10,000 for depreciation and Php 5,000 for supervision. In the current month,Baracoso actually
produced 5,500 units and incurred the following costs ,direct materials Php 33,900, direct labor
Php 74,200, variable Overhead Php 120,500, depreciation Php 10,000, and supervision Php
5,000. Prepare a static budget report. ( Hint: The Budget column is based on estimated
production of 5,000 units while the actual column is the actual cost incurred during the
period.)

Ans.
BARACOSO COMPANY
Sales Budget
For the Year Ended December 31,2020

Budget Actual Difference

Favorable
Unfavorable
Product unit 5,000 5,500
Variable cost
DM ( P 6.80) P34,000 P 33,900 P 1,00 F
DL (P16.60) 83,000 74,200 8,800 F
MOH ( P24.90) 124,500 120,500 4,000 F
Depreciation 10,000 10,000 0
Supervision 5,000 5,000 0
Total P256,500 P243,600 P12, 900 F