Shrek & Fiona Company, manufacturer of a single product, is preparing their annual budget for 2021: Requirements: 1. Prepare a Sales Budget 2. Determine production volume Transcribed Image Text: The

Shrek & Fiona Company, manufacturer of a single product, is preparing their annual budget for 2021: Requirements: 1. Prepare a Sales Budget 2. Determine production volume Transcribed Image Text: The following are the assumptions to be used:
Shrek & Fiona Company
Statement of Financial Position
As of December 31, 2020
Current Assets
Current Liabilities
Cash
18,000
Accounts Payable (N2)
240,000
Accounts Receivable (N1)
1,192,000
Taxes Payable
13,200
Less: Uncollectible accounts
(22,400) 1,169,600
Dividends Payable
500,000
Inventories
Total Current Liabilities
753,200
Raw Materials (12,000 pounds)
30,000
Finished Goods (4,000 units)
140,000
170,000
Total Current Assets
1,357,600
Stockholder’s Equity
Common Stock (100,000 shares)
Retained Earnings
500,000
Non-current Assets
360,400
Property, plant, and equipment
320,000
Total Stockholder’s Equity
860,400
Less: Accumulated depreciation
(64,000) 256,000
Total Assets
1,613,600
Total Liabilities and SHE
1,613,600
N1 2020 3rd quarter sales P2,500,000
200,000
992,000
P 1,192,000
2020 4th quarter sales P3,100,000
N2 2020 3rd quarter purchases P300,000
P
75,000
2020 4th quarter purchases P330,000
165,000
P
240,000 Transcribed Image Text: 1. Estimated unit sales for the first quarter of 2021 is 40,000 units and expected to increase 10% quarterly. Selling
price fluctuates as follows:
Quarter
Unit price
1st
2nd
Зrd
4th
64
66
62
62
Assume that of each quarter’s sales: 20% are cash sales while the remaining 80% are credit sales. Shrek & Fiona
Company estimates that 60% of credit sales are collected in the quarter of sale with 2% discount, 30% in the quarter
of following sale, 9% in the second quarter following sale and 1% are considered as uncollectible.
2. Finished product requires 3 pounds of direct materials at P2.50 per pound. Finished good ending inventory is
equal to 10% of the next quarter sales while raw materials ending inventory is equal to 10% of the next quarter
production needs of materials. First quarter of 2022 sales is expected to be at 50,000 units while raw materials
ending is at 13,500 pounds. (Units are rounded to the nearest ones.)
3. Each quarter’s purchase are paid 50% in that quarter with 5% purchase discount, 25% in the following quarter
and the remainder in the second quarter following the purchase.
4. Each finished goods requires 5 direct labor hours with an hourly rate of P4.00 payable on the end of each
month.
5. For Factory overhead budget, use the following cost formula:
Indirect labor
PO.02 per direct labor worked (same payment scheme with direct labor)
Indirect material
P2 per unit produced
P48,000 annually, paid at the beginning of the year
P6,500 per month
Insurance
Factory rent
Utilities
PS00 per quarter plus PO.50 per unit produced
Maintenance
P300 per quarter plus PO.30 per unit produced
10% of the PPE cost, annually
Depreciation
All overhead costs involve cash outlays are paid in the period which they are incurred, insurance cost. Worthy to
note, the company assumes that all indirect materials are used and paid in the month it was purchased.
6. Selling and administrative expenses
P65,000 annually, paid at the beginning of the year
5% of total sales, paid quarterly
Advertising
Commission
Admin salaries
P100,000 per quarter (same payment scheme with direct labor)
Office rent
P5,000 per month
7. Income tax is 30%, paid on the first quarter of the following year.
8. For cash budget, assume the following:
a. The company desires to maintain P15,000 minimum cash balance
b. Dividend is declared every end of the 4″ quarter of the year P15 per issued and outstanding share and paid
every 2 quarter of the following year
c. At the end of the 2nd quarter, the company plans to purchase P100,000 worth of equipment.
d. Any excess cash at the end of the 1″ quarter of the year is used to buy long term investments P10,000
increments. 3% interest rate is credited to the company’s bank account at the quarter’s end based on
original cost of investment
e. In case of deficit, the company borrow from the bank P10,000 increments, payable in one year, 10% interest
rate is automatically debited to the company’s bank account at the end of every quarter.

Do you need us to help you on this or any other assignment?


Make an Order Now