QUIZ: Budgeting Computation Chain
(New Scenario)
Company Background:
Floral Print Co. is preparing its master budget for the first quarter of 2025. They
manufacture customized floral printed apparel.
GIVEN DATA:
Selling Price per Unit: P250
Sales Forecast (Units):
Jan: 4,000; Feb: 5,000; Mar: 6,000; Apr: 7,000 (for inventory planning)
Desired Ending FG Inventory: 25% of next month’s sales
Beginning FG Inventory (Jan 1): 800 units
Materials Required per Unit: 3 meters
Cost of Fabric per Meter: P30
Desired Ending Raw Materials Inventory: 15% of next month’s material needs
Beginning Raw Materials Inventory (Jan 1): 3,000 meters
Direct Labor: 1.5 hour per unit @ P70/hour
Variable Overhead: P6 per direct labor hour
Fixed Overhead per Month: P12,000 (incl. P4,000 depreciation)
Variable Selling & Admin Expense: P18 per unit sold
Fixed Selling & Admin Expense per Month: P10,000 (incl. P3,000 depreciation)
Tax Rate: 25%
Instructions:
- Use proper table formats for each budget.
- Show all computations clearly.
- Round off amounts to the nearest peso when necessary.
QUESTIONS:
1. Sales Budget
Prepare a sales budget for January to March 2025. Show the number of units sold, price
per unit, and total revenue per month.
2. Production Budget
Prepare a production budget for January to March 2025. Include sales, desired ending
inventory, beginning inventory, and units to be produced.
3. Direct Materials Purchases Budget (January Only)
Using production data, compute how many meters of fabric should be purchased in
January and the total cost.
4. Direct Labor Budget
Prepare the direct labor budget from January to March. Include units to be produced,
hours per unit, total hours, and total labor cost.
5. Overhead Budget
Compute both variable and fixed overhead for the first quarter based on labor hours.
6. Selling and Administrative Expense Budget
Prepare the total S&A budget including variable and fixed costs per month.
7. Ending Finished Goods Inventory Budget (as of March 31)
Compute the value of finished goods based on unit costs from materials, labor, and
overhead.
8. Cost of Goods Sold Budget
Calculate COGS based on total production cost and ending inventory.
9. Budgeted Income Statement
Prepare the income statement for the first quarter showing gross profit, operating
income, and net income after tax.
