Almirez, Wenlyn Joy P

Agonia, Citadel F.
BSMA 601
Strategic Cost Management

ABC Company makes one (1) product. Its sales price is expected to be P80 per unit. Actual sales for November 201A are
3,100 units, and 3,400 units for December 201A. ABC budgets its sales for the next six (6) months for 201B:
January 2,700 April 2,500
February 2,600 May 2,900
March 2,750 June 3,000
All sales are on account. ABC collects its accounts as follows:

70% in the month of sale

20% in the month following sale
10% in the second month following sale

Uncollectible accounts are negligible and can be disregarded. The beginning inventory on January 1, 201B is 270 units.
ABC desires an ending inventory of 10% of the next month’s budgeted sales.

Each unit of finished goods requires 4 kg of raw materials that cost P3.00/kg. ABC desires an ending inventory of direct
materials equal to 20% of the following month’s production needs. Assume that ABC met this requirement at the end of
December, 201A. ABC makes all purchases on account and pays its accounts payable as follows: 60% in the month of
purchase and 40% in the month following purchase. Purchases in December 201A were P31,000.

Required (20 items x 5 points):

Prepare the following by month for the first quarter of 201B and for the first quarter as a whole. a. Sales
budget (4 items)
January February March Total
Sales in units 2,700 2,600 2,750 8,050
b. Production budget (4 items)

January February March Total

Sales in units 2,700 2,600 2,750 8,050
Add: Budgeted Ending inventory
Units(10% in the second month 260 275 250 785
following sale)

Total 2,960 2,875 3,000 8,835

Less: Budgeted Beginning Inventory 270 260 275 805

Production required 2,690 2,615 2,725 8,030

c. Purchases budget (4 items)

January February March Total

Budgeted Production units 2,690 2,615 2,725 8,030
X DM Required per unit (kg) 4 4 4 4
DM Required per production (kg) 10,760 10,460 10,900 32,120
Add: Beginning Ending DM (kg) 2,092 2,180 2,032 6,304
Less: Beginning Direct Material (kg) 2,152 2,092 2,180 6,424
Budgeted DM purchase (kg) 10,700 10,548 10,752 32,000
Cost per kg 3 3 3 3
Budgeted DM purchase in pesos 32,100 31,644 31,368 96,000

This study source was downloaded by 100000811292200 from CourseHero.com on 12-09-2022 15:01:52 GMT -06:00

https://www.coursehero.com/file/152522265/SCM-10-Activity1docx/
 d. Schedule of cash receipts (4 items)
ABC Company makes one (1) product. Its sales price is expected to be P80 per unit. Actual sales for
November
201A are 3,100 units, and 3,400 units for December 201A. ABC budgets its sales for the next six (6) months for
January February March
December (P31,000 x 10%) P3,100
January
P2,700 x 70% 1,890
P2,700 x 20% 540
P2,700 x 10% 270
February
P2,600 x 70% 1,820
P2,600 x 20% 520
P2,600 x 10% 260
March
P2,750 x 70% 1,925
P2,750 x 20% 550
Total P5,530 P2,610 P2,735

e. Schedule of cash disbursements (4 items)

January June July

Jan (32,100 x 40%) P12,840
Feb
P31,644 x 60% 18,986.4
P31,644 x 40% P12,657.6
March
P32,256 x 60% 19,353.6
P32,256 x 40% P12,902.4
April (P31,368 x 60%) 18,820.8
Total P31,826.4 P32,011.2 P31,723.2

This study source was downloaded by 100000811292200 from CourseHero.com on 12-09-2022 15:01:52 GMT -06:00

https://www.coursehero.com/file/152522265/SCM-10-Activity1docx/
Powered by TCPDF (www.tcpdf.org)