University of Saint Louis

Tuguegarao City Cagayan

Instructions: Solve what is asked in good form on
your separate worksheets. Encircle your final
answers. Each is worth 2 points.
FACT PATTERN 1:
Daffy Tunes manufactures a toy rabbit with moving
parts and a built-in voice box. Projected sales in units
for the next 5 months are as follows:
Projected
Month
Sales in Units
--------------------January
30,000
February
36,000
March
33,000
April
40,000
May
29,000
Each rabbit requires basic materials that Daffy
purchases from a single supplier at P3.50 per rabbit.
Voice boxes are purchased from another supplier at
P1.00 each. Assembly labor cost is P2.00 per rabbit,
and variable overhead cost is P0.50 per rabbit. Fixed
manufacturing overhead applicable to rabbit
production is P12,000 per month. Daffy's policy is to
manufacture 1.5 times the coming month's projected
sales every other month, starting with January (i.e.,
odd-numbered months) for February sales, and to
manufacture 0.5 times the coming month's projected
sales in alternate months (i.e., even-numbered
months).
This allows Daffy to allocate limited
manufacturing resources to other products as needed
during the even-numbered months.
Required:
1. The unit production budget for toy rabbits for
January is
2. The dollar production budget for toy rabbits for
February is
FACT PATTERN 2:
Karmee Company has been accumulating operating
data in order to prepare an annual profit plan. Details
regarding Karmee's sales for the first 6 months of the
coming year are as follows:
Estimated Monthly Sales Type of Monthly Sale
-----------------------------------------January
P600,000
Cash sales
20%
February
650,000
Credit sales 80%
March
700,000
April
625,000
May
720,000
June
800,000
Collection Pattern for Credit Sales
----------------------------------Month of sale
30%
One month following sale
40%
Second month following sale
25%
Karmee's cost of goods sold averages 40% of the
sales value. Karmee's objective is to maintain a target
inventory equal to 30% of the next month's sales in
units. Purchases of merchandise for resale are paid
for in the month following the sale. The variable
operating expenses (other than cost of goods sold) for

MACR-009
Karmee are 10% of sales and are paid for in the
month following the sale. The annual fixed operating
expenses are presented below. All of these are
incurred uniformly throughout the year and paid
monthly except for insurance and property taxes.
Insurance is paid quarterly in January, April, July, and
October. Property taxes are paid twice a year in April
and October.
Annual Fixed Operating Costs
-----------------------------Advertising
P720,000
Depreciation
420,000
Insurance
180,000
Property taxes
240,000
Salaries
1,080,000
Required:
3. The amount of cash collected in March for Karmee
Company from the sales made during March will be
4. Karmee Company's total cash receipts for the
month of April will be
5. The purchase of merchandise that Karmee
Company will need to make during February will be
6. The amount for cost of goods sold that will appear
on Karmee Company's pro forma income statement
for the month of February will be
7. The total cash disbursements that Karmee
Company will make for the operating expenses
(expenses other than the cost of goods sold) during
the month of April will be
FACT PATTERN 3:
Information pertaining to Noskey Corporation's sales
revenue is presented in the following table.
November December January
Year 1
Year 1
Year 2
(Actual)
(Budget)
(Budget)
--------- --------------Cash sales P80,000 $100,000 $ 60,000
Credit sales 240,000 360,000 180,000
--------- -------- -------Total sales P320,000 P460,000 P240,000
========= ======== ========
Management estimates that 5% of credit sales are
uncollectible. Of the credit sales that are collectible,
60% are collected in the month of sale and the
remainder in the month following the sale. Purchases
of inventory are equal to next month's sales and gross
profit margin is 30%. All purchases of inventory are on
account; 25% are paid in the month of purchase, and
the remainder is paid in the month following the
purchase.
Required:
8. Noskey Corporation's budgeted cash collections in
December year 1 from November year 1 credit sales
are
9. Noskey Corporation's budgeted total cash receipts
in January year 2 are
10. Noskey Corporation's budgeted total cash
payments in December year 1 for inventory
purchases are

Operational and Financial Budgeting, Master Budget