SUGGESTED ANSWERS

Question 1
Part I
MC1. c ✓
MC2. b ✓
MC3. c ✓
MC4. b ✓
MC5. c ✓

Part II

Treat 1 Treat 2

Budgeted sales in units 540 680 ✓

+Targeted ending stock (FG) 180 160 ✓

Total Requirements 720 840

- Opening stock (FG) 100 100 ✓

Units to be Produced 620 740

Direct Materials Milly Leady

Treat 1: 620: x 14 kgs, x 7kgs) 8 680 4 340 ✓

Treat 2: 740: x 8kgs, x11 kgs 5 920 8 140 ✓

Total material needed for production 14 600 12 480

+ Targeted ending stock of RM 600 360 ✓

Total requirements 15 200 12 840

- Opening stock of RM 500 300 ✓

Raw materials to be purchased 14 700 12 540

X Price x P16.00 x P22.00 ✓

Total P235 000 P275 880

Grand Total = P510 880 ✓

(P) (P)

Treat 1 Treat 2

Direct Materials cost: [14 kgs x P16.00; 7kgs x P22.00] 224.00 154.00 ✓

[8kgs xP16.00; 11kgs x P22.00] 128.00 242.00 ✓

Direct labour costs [5hrs x P30; 7hrs x P30] 150.00 210.00 ✓

Manufacturing overheads [5hrs x P48; 7hrs x P48] 240.00 336.00 ✓

Budgeted manufacturing costs per unit 768.00 916.00

Finished Goods stock of Units 180 160

Total P138 240 P148 560 ✓

Grand Total: P284 800

[a]
November 2023 Cash Budget [P] [P]
Opening Balance: 15 200 ½
Add Receipts:
November Cash Sales 100 000 ½
50% of November Sales (P140 000 x 0.5) 70 000 ½
20% of October Sales (P120 000 x 0.2) 24 000 ½
15% of September Sales (P190 000 x 0.15) 15 000 ½
Dividends 3 000 ½ 212 000
Cash available 227 200

Less Disbursements:
November Purchases (60% x P240 000) 144 000 ½
October Purchases (40% x P160 000) 64 000 ½
Salaries 67 000 ½
Other expenses 6 500 ½ 281 500
Cash deficit (54 300) ✓
Cash borrowing [P54 300 + 15 000 ] 69 300✓
Ending Cash Balance 15 000

Depreciation is a non-cash item and is not included in the Cash Budget.

Bad debts of 15% have been excluded in the cash budget. ✓

Advantages of Cash Budgeting

Cash budgets help in avoiding foresee shortages of cash, as well as excessive unused cash. This
supports planning activities as the organization will be able to map when they will have
shortages of cash (borrow from bank), and where they will excess cash (invest in other
ventures). ✓✓

Cash flow statements are required by banks and other external entities when the organization
makes requests for cash injections into the business. ✓✓

Question 3
Cee Dee Eey
Current Mix 1 2 2
[Ratio of mix [10/20, 6/20 etc]] [0.2] [0.4] [0.4] ✓
x CM / unit P5.00 P3.00 P2.00
Weighted Average CM P1.00 P1.20 P0.80 ✓

Total Weighted Average CM = P3.00 ✓

BEP of Mix [units] = Fixed Costs = P 150 000 = 50 000 units ✓
CM of Mix P3.00
50 000 represents Mix [total units] at break-even, of which the weights are 0.2, 0.4 and 0.4
Therefore, number of each unit sold:
Cee 50 000 x 0.2 = 10 000
Dee 50 000 x 0.4 = 20 000
Eey 50 000 x 0.4 = 20 000 ✓✓
50 000 units sold at BEP

[b] BEP [units] = Fixed Costs = P 129 600 = 720 units ✓

CM ????
Therefore CM/unit = P129 600 /720 = P180.00 per unit ✓

Therefore Variable Costs per unit = P300.00 – P180.00 = P120.00 ✓