Bruegas, Elaiza Rein A.

Unit Strategy and the Master Budget

2BSA2 Ms. Jocelyn Chua

EXERCISE 3

1)
Mini Products Inc.
Materials Purchases Budget

YEAR 2 YEAR 3
First Second Third Fourth First
Calculator produced 60,000 90,000 150,000 100,000 80,000
Multiply: Chips per calculator 3 3 2 3 3
Production needs 180,000 270,000 450,000 300,000 240,000
Add: Ending Inventory 54,000 90,000 60,000 48,000 48,000
Total Chips Need 234,000 360,000 510,000 348,000 1,248,000
Less: Beginning Inventory 36,000 54,000 90,000 60,000 36,000
Required Chips Purchases 198,000 306,000 420,000 288,000 1,212,000
Multiply: Cost per ship P 200 P 200 P 200 P 200 P 200
Total Cost of Purchase 39,600,000 61,200,000 84,000,000 57,600,000 242,400,000

2)

ENDING INVENTORY
First
(Production Needs of 2nd) 270,000 x 20% 54,000
Second
(Production Needs of 3rd) 450,000 x 20% 90,000
Third
(Production Needs of 4th) 300,000 x 20% 60,000
Fourth
(Production Needs of 1st of Year) 240,000 x 20 % 48,000
TOTAL 252,000

EXERCISE 4

1)
JC Corporation
Direct Labor Budget

Quarters Total
First Second Third Fourth
Units to be produced 5,000 4,400 4,500 4,900 18,800
Multiply by: Hour – Direct labor 0.40 0.40 0.40 0.40 0.40
Total Direct Labor-hours needed 2,000 1,760 1,800 1,960 7,520
Multiply by: Cost – Direct Labor P11 P11 P11 P11 P11
Total Direct labor – hour cost 22,000 19,360 19,800 21,560 82,720
 Bruegas, Elaiza Rein A. Unit Strategy and the Master Budget
2BSA2 Ms. Jocelyn Chua

2)
JC Corporation
Direct Labor Budget
(not adjusted each quarter)

Quarters Total
First Second Third Fourth
Units to be Produced 5,000 4,400 4,500 4,900 18,800
Multiply: Direct labor – hours 0.40 0.40 0.40 0.40 0.40
Total Direct labor – hours needed 2,000 1,760 1,800 1,960 7,520
Less: Regular hours 1,800 1,800 1,800 1,800 7,200
Overtime hours 200 (40) 0 160 320
Wages for regular hours (P11/hour x P19,800 P19,800 P19,800 P19,800 P79,200
1,800 hours)
Add: Wage overtime (P11/hour x 3,300 0 0 2,640 5,940
1.5 times)
Total Direct labor – hour cost 23,100 19,800 19,800 22,440 85,140

EXERCISE 5

Kiko Corporation
Manufacturing Overhead Budget

Quarters Total
First Second Third Fourth
Direct labor – hours needed 5,000 4,800 5,200 5,400 20,400
Multiply: Variable Manufacturing 1.75 1.75 1.75 1.75 1.75
Overhead Rate
Variable Manufacturing Overhead 8,750 8,400 9,100 9,450 35,700
Fixed Manufacturing Overhead 35,000 35,000 35,000 35,000 140,000
Total Manufacturing Overhead 43,750 43,400 44,100 44,450 175,700
Less: Depreciation 15,000 15,000 15,000 15,000 60,000
Total Cash Disbursements – 28,750 28,400 29,100 29,450 115,750
Manufacturing Overhead

Total manufacturing overhead 35,700

Divide: Direct labor-hours 20,400
Predetermined overhead rate for the year 1.75

Total fixed manufacturing overhead 140,000

Divide: Direct labor-hours 20,400
Predetermined overhead rate for the year 6.86

Total overhead (P35,700 + 140,000) 175,700

Divide: Direct Labor – hours 20,400
Predetermined overhead rate for the year 8.61