Master Budget Procedure

Quiz

GARCIA, JOANNA MARIE C.

COVID Company sold 15, 590 units of Product Immuno vaccine in 2018 which was higherby 5%
compared to the units sold in 2017. the product were sold at P280 per unit.

Due to the increase of demand in buyers’ preferences, the COVID Company expects to increase
the salesby 35% in 2019 against 2018 performance. The Company plan to sell the product at P400 per
unit.

COVID Company in the production of one unit of Product Immuno Vaccine requires the
following raw materials: 4 units of Material X and 6 units of Material Y. The inventory data of Product
Immuno Vaccines are as follows:

Beginning Inventory January 1, 2019 (Actual) 4,800 units

Ending Inventory December 31, 2019 ( Plan) 7,900 units

The estimated overhead cost are as follows:

Variable Cost based on Unit Produced:

Indirect materials and factory supplies P 8.00 per unit

Light and Power P15.00 per unit

Other variable Cost P20.00 per unit

Fixed Cost

Salary of Supervisor P350,000

Depreciation P500,000

Taxes P150,000

Other Fixed Cost P250,000

The cost of the beginning inventory of Product Immuno Vaccine is P280 per unit. On January 1,
2019, COVID Company has 14,500 units of Material X and 35,000 units of Material Y. It plans to have an
inventory of 25,400 units of Material X and 48,200 units of Material Y on December 31, 2019.

The cost of the raw materials per unit are as follows: Material X, P12; Material Y, P21.

The Direct Laborers are paid based on the number of units they have produced at the rateof
P110 per unit.

Required: Prepare the following Budget:

1. Sales Budget

2. Production Budget
 3. Estimated Cost of Sales

Sales Budget

COVID COMPANY

SALES BUDGET

For the year 2019

ESTIMATED
SELLING UNITS PRICE SALES
PROJECTED
SALES (15,590 40
*1.35) 21,046.50 0.00 8,418,600.00

Production Budget

Schedule 1: Number of Units Produced

Number of units to sell 21,046.50 units

Add: Plan Inventory Level 7, 900 units

Total 28,946.50 units

Less: Beginning Inventory (4,800.0)units

Estimated number units to produce 24,146.50 units

Schedule 2: Raw Materials Required for the Production

Material X Material Y
Number of Units to Produce 24,146.50 units 24,146.50 units
Multiply by: number per unit 4 units 6 units
Materials required for 96,586.00 144,879.00
production
Multiplied by: cost per unit 12 21
Cost to Produce the Product 1,159,032.00 3,042,459.00
Total Direct Material Cost 4,201,491.00

Schedule 3: Direct Labor Budget

Estimated number of units to produce 24,146.50 units

Multiplied by: Direct Labor rate 110
Estimated Direct Labor Cost 2,656,115.00

Schedule 4: Factory Overhead Budget

Variable Cost based on Unit Produced:

Indirect materials (24,146.50 x P 8.00 per unit) 193,172.00
Light and Power (24,146.50 x P15.00 per unit) 362,197.50
Other variable Cost (24,146.50 x P20.00 per unit) 482,930.00
Total Variable Manufacturing Cost 1,038,299.50
Fixed Manufacturing Cost
Salary of Supervisor P350,000
Depreciation P500,000
Taxes P150,000
Other Fixed Cost P250,000
Total Fixed Manufacturing Cost 1,250,000.00
Total Estimated Factory Overhead Cost 2,288,299.50
 COVID COMPANY

PRODUCTION BUDGET

For the year 2019

Direct Material Cost 4,201,491.00

Direct Labor Cost 2,656,115.00
Factory Overhead Cost 2,288,299.50
Total Estimated Production Cost 9,145,905.50

Estimated Cost of Sales

Schedule 5: Raw Materials to Purchase

Material X Material Y
Materials required for the 96,586.00 144,879.00
production
Add: Plan Ending Inventory 25,400 48,200
Total 121,986.00 193,079.00
Less: Beginning Inventory (14,500.00) (35,000.00)
(actual)
Required Materials to 107,486.00 158,079.00
Purchase
Multiplied by: Unit Price 12 21
Cost to Purchases 1,289,832.00 3,319,659.00
Total Cost of Raw Material purchases amount to (1,289,832.00 + 3,319,659.00) = 4,609,491.00

Manufacturing Cost:
Direct Materials
Material X (14,500 x P12) 174,000.00
Material Y (48,200 x P21) 1,012,200.00 1,186,200.00
add: Purchases 4,609,491.00
Total Materials for Use 5,795,691.00
less: Raw Materials Ending
Material X (25,400 x P12) 304,800.00
Material Y (48,200 x P21) 1,012,200.00 (1,317,000.00)
Direct Material Cost 4,478,691.00
Add: Direct Labor Cost 2,656,115.00
Factory Overhead Cost 2,288,299.50
Total Manufacturing 9,423,105.50
(Production) Cost
Add: Work in Process, -
Beginning (no details)

Total Goods put in Process 9,423,105.50

Less: Work in Process, Ending -
(no details)
Total cost of goods 9,423,105.50
manufactured
Add: Finished goods, beginning 1,344,000.00
(4,800xP280)
Total Goods available for sale 10,767,105.50
Less: finished goods ending
(P 9,423,105.50/24,146.50) x (3,082,953.37)
7900
Estimated Cost of Sales 7,684,152.13