Master Planning

• Budgeting
• Master Planning/Profit Planning
• Responsibility accounting
• Sales Forecast

• Initial Budget Proposal

• Internal

• External
Beginning Merchandise Inventory P. 45, 000
Sales P. 25, 000
Net Purchase P. 20, 000
Freight in P. 8, 000
Purchase Discount P. 5, 000
Purchase return and Allowances P. 3, 000
Purchases P. 20, 000
Ending Merchandise Inventory P. 10, 000
Operating expense P. 1, 000
COMPUTE FOR:
• 1) COGS for Perpetual = P. 35, 000
• 2) Net Income/ Net Loss in Perpetual = (P. 9, 000)

• 2) COGS for Periodic

• 3) Net income/ Net Loss in Periodic
Solution:
• Sales: P. 25, 000
• Less: COGS: (35, 000)
• Gross Profit: (10, 000)
• Less: Operating Expense: 1, 000
• Net Income/ Net Loss: (P. 11, 000)
• Beginning Inventory P. 45, 000
• Add: Net Purchases 20, 000
• Cost available for sale P. 65, 000
• Ending Inventory (10, 000)
• Cost of Good Sold P. 55, 000
Solution:
• Sales: P. 25, 000
• Less: COGS: (P. 55, 000)
• Gross Profit: ( 30, 000)
• Less: Operating Expense: 1, 000
• Net Income/ Net Loss: (P. 31, 000)
 RJAM sells 1, 000 pcs of T-shirts for P. 40, 000. The variable cost is 40% of the Total sales and its
fixed cost is P. 2, 000.

•Total Unit %
• Sales P. 40, 000 40 100
• Variable Cost 16, 000 16 40
• Contribution Margin 24, 000 24 60
• Fixed Cost P. 2, 000
• Net Income/ Net Loss 22, 000

• Unit Sold= 1, 000

• * Margin of safety
RJAM sells 1, 000 pcs of T-shirts for P. 40, 000. The variable cost is 40% of the Total sales and its
fixed cost is P. 2, 000.

Break even in total sales= Fixed cost/ CM Ratio

Break even in total sales= P. 2, 000/ 60%
Break even in total sales= P. 3,333.33
Break even in unit sold= Fixed cost/ CM per unit
Break even in unit sold= P. 2, 000/ P. 24
Break even in unit sold= 83.33
 RJAM sells 1, 000 pcs of T-shirts for P. 40, 000. The variable cost is 40% of the Total sales and its
fixed cost is P. 2, 000.

•Total Unit %
• Sales P. 3, 333.33 40 100
• Variable Cost 1, 333.33 16 40
• Contribution Margin 2,000 24 60
• Fixed Cost P. 2, 000
• Net Operating Income -
• Unit Sold= 83.33

• * Margin of safety
• Margin of Safety= Actual- Break even
Direct Materials P. 30, 000
Direct Labor P. 28, 000
Manufacturing Overhead (OFO) P. 20, 000
Indirect Labor P. 16, 000
Indirect Materials P. 2, 000
Ending Work in Process P. 12, 000
Beginning finished goods inventory P. 21, 000

Note: The Beginning work in process is the aggregate value of Direct Cost,
while the Ending Finished goods is the P 20% of the Total Manufacturing
cost.
• Total Direct Cost
• Total Indirect Cost + OFO
• Total Manufacturing Cost
• COGM= Beginning WIP + Total Manufacturing Cost – Ending WIP
• COGS= Beginning FG+ COGM- Ending FG
• POHR= Estimated annual overhead cost/ Estimated annual labor cost
• Step Variable
• Discretionary cost
• Committed cost
• Cost behavior
• Cost prediction
• Cost estimation
Job Order and Process Costing
• Underapplied and Over applied