MANAGEMENT

ACCOUNTING
BUDGETING
1. ROJALES Co. has projected sales to be ₱ 60,000 in January, ₱ 75,000 in
February, and ₱ 80,000 in March. ROJALES wants to have 25% of next
month’s sales needs on hand at the end of a month. If ROJALES has an
average gross profit of 40%, what is the amount of February Purchases?

a. ₱ 30,500
b. ₱ 45,750
c. ₱ 46,250
d. ₱ 76,250 3 minutes

End
1. ROJALES Co. has projected sales to be ₱ 60,000 in January, ₱ 75,000 in
February, and ₱ 80,000 in March. ROJALES wants to have 25% of next
month’s sales needs on hand at the end of a month. If ROJALES has an
average gross profit of 40%, what is the amount of February Purchases?

a. ₱ 30,500
b. ₱ 45,750
c. ₱ 46,250
d. ₱ 76,250
2. JAVIER Company has budgeted sales of 24,000 finished units for the
forthcoming 6-month period. It takes 4 lbs. of direct materials to make one
finished unit. Given the following:
Finished Units direct materials ( in lbs.)
Beginning inventory 14,000 44,000
Target ending inventory 12,000 48,000
How many pounds of direct materials should be budgeted for purchase
during the 6-month period?
3 minutes
a. 92,000
b. 88,000
c. 96,000
d. 100,000

End
2. JAVIER Company has budgeted sales of 24,000 finished units for the
forthcoming 6-month period. It takes 4 lbs. of direct materials to make one
finished unit. Given the following:
Finished Units direct materials ( in lbs.)
Beginning inventory 14,000 44,000
Target ending inventory 12,000 48,000
How many pounds of direct materials should be budgeted for purchase
during the 6-month period?

a. 92,000
b. 88,000
c. 96,000
d. 100,000
3. INCOY Merchandising is preparing its cash budget for January 2014 and
made the following projections:
Sales ₱ 1,500,000
Gross profit rate based on cost 33 1/3
Decrease in inventories 70,000
Decrease in accounts payable for inventories 120,000
For January 2014, what was the estimated cash disbursements for inventories

a. ₱ 935,000 3 minutes
b. ₱ 1,050,000
c. ₱ 1,055,000
d. ₱ 1,175,000

End
3. INCOY Merchandising is preparing its cash budget for January 2014 and
made the following projections:
Sales ₱ 1,500,000
Gross profit rate based on cost 33 1/3
Decrease in inventories 70,000
Decrease in accounts payable for inventories 120,000
For January 2014, what was the estimated cash disbursements for inventories

a. ₱ 935,000
b. ₱ 1,050,000
c. ₱ 1,055,000
d. ₱ 1,175,000
4. PEÑANO Company budgets sales of 22,000 units for January, and 30,000 for
February. The budgeted beginning inventory for January was 7,000 units.
PEÑANO desires an ending inventory equal to one-half of the following
month’s sales needs. Budgeted production for January is

a. 37,000 units
b. 30,000 units
c. 26,000 units
d. 14,000 units 3 minutes

End
4. PEÑANO Company budgets sales of 22,000 units for January, and 30,000 for
February. The budgeted beginning inventory for January was 7,000 units.
PEÑANO desires an ending inventory equal to one-half of the following
month’s sales needs. Budgeted production for January is

a. 37,000 units
b. 30,000 units
c. 26,000 units
d. 14,000 units
5. CUENTO Company plans to sell 24,000 units of Product A in July and 30,000
units in August. Sales of Product A during June was 25,000 units. Past
experience has shown that end-of-month inventory must equal 3,000 units
plus 30% of the next month’s sales. On June 30, this requirement was met.
Based on these data, how many units of Product A must be produced during
the month of July?

a. 28,800
b. 22,200 3 minutes
c. 24,000
d. 25,800

End
5. CUENTO Company plans to sell 24,000 units of Product A in July and 30,000
units in August. Sales of Product A during June was 25,000 units. Past
experience has shown that end-of-month inventory must equal 3,000 units
plus 30% of the next month’s sales. On June 30, this requirement was met.
Based on these data, how many units of Product A must be produced during
the month of July?

a. 28,800
b. 22,200
c. 24,000
d. 25,800
6. JAMIN Company manufactures a single product. JAMIN keeps its inventory
of finished goods at 75% of the coming month’s budgeted sales and inventory
of raw materials at 50% of the coming month’s budgeted production needs.
Each unit of product requires two pounds of materials. The production
budget is, in units: May, 1,000; June 1,200; July, 1,300; August, 1,600. Raw
material purchases in June would be

a. 1,525 pounds
b. 2,500 pounds 3 minutes
c. 2,800 pounds
d. 3,050 pounds

End
6. JAMIN Company manufactures a single product. JAMIN keeps its inventory
of finished goods at 75% of the coming month’s budgeted sales and inventory
of raw materials at 50% of the coming month’s budgeted production needs.
Each unit of product requires two pounds of materials. The production
budget is, in units: May, 1,000; June 1,200; July, 1,300; August, 1,600. Raw
material purchases in June would be

a. 1,525 pounds
b. 2,500 pounds
c. 2,800 pounds
d. 3,050 pounds
7. BUNYI Company is budgeting sales of 53,000 units of product A1 for 2013.
The production of A1 requires 4 kilos of chemical Z5. During 2013, BUNYI
plans to reduce the inventory of Z5 by 50,000 kilos and increase the finished
goods inventory of A1 by 6,000 units. There is no work-in-process inventory.
How many kilos of Z5 is BUNYI budgeting to purchase in 2013?

a. 138,000
b. 162,000
c. 186,000 3 minutes
d. 238,000

End
7. BUNYI Company is budgeting sales of 53,000 units of product A1 for 2013.
The production of A1 requires 4 kilos of chemical Z5. During 2013, BUNYI
plans to reduce the inventory of Z5 by 50,000 kilos and increase the finished
goods inventory of A1 by 6,000 units. There is no work-in-process inventory.
How many kilos of Z5 is BUNYI budgeting to purchase in 2013?

a. 138,000
b. 162,000
c. 186,000
d. 238,000
8. NUENA Company has the following 2013 budget data:
Beginning finished goods inventory 40,000 units
Sales 70,000 units
Ending finished goods inventory 30,000 units
Direct materials ₱ 10 per unit
Direct labor ₱ 20 per unit
Variable factory overhead ₱ 5 per unit
Fixed factory overhead ₱ 80,000
What is the total budgeted production costs for 2013? 3 minutes
a. ₱ 2,100,000
b. ₱ 2,180,000
c. ₱ 2,240,000
d. ₱ 2,320,000

End
8. NUENA Company has the following 2013 budget data:
Beginning finished goods inventory 40,000 units
Sales 70,000 units
Ending finished goods inventory 30,000 units
Direct materials ₱ 10 per unit
Direct labor ₱ 20 per unit
Variable factory overhead ₱ 5 per unit
Fixed factory overhead ₱ 80,000
What is the total budgeted production costs for 2013?
a. ₱ 2,100,000
b. ₱ 2,180,000
c. ₱ 2,240,000
d. ₱ 2,320,000
9. TAKAHASHI Company’s budget contains the following information:
units
Beginning finished goods 85
Beginning work-in-process in equivalent units 10
Desired ending finished goods inventory 100
Desired ending work-in-process in equivalent units 40
Projected sales 1,800

How many equivalent units should TAKAHASHI plan to produce? 3 minutes

a. 1,565
b. 1,800
c. 1,815
d. 1,845

End
9. TAKAHASHI Company’s budget contains the following information:
units
Beginning finished goods 85
Beginning work-in-process in equivalent units 10
Desired ending finished goods inventory 100
Desired ending work-in-process in equivalent units 40
Projected sales 1,800

How many equivalent units should TAKAHASHI plan to produce?

a. 1,565
b. 1,800
c. 1,815
d. 1,845
10. ROM Company has budgeted sales on account of 135,000 for June, ₱ 120,000
for July, ₱ 211,000 for August, and ₱ 198,000 for September. Collection
experience indicates that 60% of the budgeted credit sales will be collected the
month after the sale, 36% the second month, and 4% will be uncollectible. The
cash from accounts receivable that should be budgeted for September would be

a. ₱ 169,800
b. ₱ 194,760
c. ₱ 197,880 3 minutes
d. ₱ 198,600

End
10. ROM Company has budgeted sales on account of 135,000 for June, ₱ 120,000
for July, ₱ 211,000 for August, and ₱ 198,000 for September. Collection
experience indicates that 60% of the budgeted credit sales will be collected the
month after the sale, 36% the second month, and 4% will be uncollectible. The
cash from accounts receivable that should be budgeted for September would be

a. ₱ 169,800
b. ₱ 194,760
c. ₱ 197,880
d. ₱ 198,600
11. UNGCAD Corporation plans to sell 200,000 units of exotic products in October
and anticipate a growth in sales of 5 percent per month. The target-ending
inventory in units of the product is 80% of the next month’s estimated sales.
There are 150,000 units in inventory as of the end of September. The production
requirement in units of exotic products for the quarter ending December 31
would be

a. 675,925
b. 670,560 3 minutes
c. 665,720
d. 656,900

End
11. UNGCAD Corporation plans to sell 200,000 units of exotic products in October
and anticipate a growth in sales of 5 percent per month. The target-ending
inventory in units of the product is 80% of the next month’s estimated sales.
There are 150,000 units in inventory as of the end of September. The production
requirement in units of exotic products for the quarter ending December 31
would be

a. 675,925
b. 670,560
c. 665,720
d. 656,900
12. RESULLAR Awards Company budgeted production of 47,000 brass plaques in
2013. Brass sheet is required to produce a brass plaque. The estimated January 1,
2013 brass sheet inventory is 240,000 square inches. The desired December 31,
2013 brass sheet inventory is 200,000 square inches. Assume 96 square inches of
brass sheet are required for each brass plaque. If the brass sheet costs ₱ 0.12 per
square inch, how much is the direct materials purchases budget for 2013?

a. ₱ 536,640
b. ₱ 546,240 3 minutes
c. ₱ 84,000
d. ₱ 10,440

End
12. RESULLAR Awards Company budgeted production of 47,000 brass plaques in
2013. Brass sheet is required to produce a brass plaque. The estimated January 1,
2013 brass sheet inventory is 240,000 square inches. The desired December 31,
2013 brass sheet inventory is 200,000 square inches. Assume 96 square inches of
brass sheet are required for each brass plaque. If the brass sheet costs ₱ 0.12 per
square inch, how much is the direct materials purchases budget for 2013?

a. ₱ 536,640
b. ₱ 546,240
c. ₱ 84,000
d. ₱ 10,440
13. MENDOZA Trading has budgeted unit sales of 20,000. the company wants to
maintain an ending inventory of 2,500. The beginning inventory is 1,800. Each unit
costs ₱ 12. the accounts payable at the beginning of the period was ₱ 61,000.
If the total payments for inventories during the period was ₱ 225,400. what was
the estimated accounts payable at the end of the period?

a. ₱ 65,200
b. ₱ 17,200
c. ₱ 82,000 3 minutes
d. ₱ 84,000

End
13. MENDOZA Trading has budgeted unit sales of 20,000. the company wants to
maintain an ending inventory of 2,500. The beginning inventory is 1,800. Each unit
costs ₱ 12. the accounts payable at the beginning of the period was ₱ 61,000.
If the total payments for inventories during the period was ₱ 225,400. what was
the estimated accounts payable at the end of the period?

a. ₱ 65,200
b. ₱ 17,200
c. ₱ 82,000
d. ₱ 84,000
14. ARBOLADO Company has budgeted sales of ₱ 125,000. Gross profit rate is 25%
of cost of sales. Inventories are expected to decrease by ₱ 12,000. Accounts
payable will likewise decrease by ₱ 36,500.
How much payments for inventories are budgeted?
a. ₱ 51,500
b. ₱ 75,500
c. ₱ 124,500
d. ₱ 148,500
3 minutes

End
14. ARBOLADO Company has budgeted sales of ₱ 125,000. Gross profit rate is 25%
of cost of sales. Inventories are expected to decrease by ₱ 12,000. Accounts
payable will likewise decrease by ₱ 36,500.
How much payments for inventories are budgeted?
a. ₱ 51,500
b. ₱ 75,500
c. ₱ 124,500
d. ₱ 148,500
15. BEDUA Manufacturing Company has the following data as budgeted units:
Beg.Inventory End.Inventory
Finished goods 2,500 3,200
Work-in-process 3,000 (1/3 done) 2,000 (1/4 done)
Sales 8,500

What is the budgeted equivalent production?

a. 7,700 units
b. 7,800 units 3 minutes
c. 8,200 units
d. 8,700 units

End
15. BEDUA Manufacturing Company has the following data as budgeted units:
Beg.Inventory End.Inventory
Finished goods 2,500 3,200
Work-in-process 3,000 (1/3 done) 2,000 (1/4 done)
Sales 8,500

What is the budgeted equivalent production?

a. 7,700 units
b. 7,800 units
c. 8,200 units
d. 8,700 units
16. FOLLERO Corporation will sell for the month of June, 8,000 pieces of its
merchandise at a unit price of ₱ 30. The budgeted gross profit rate is 33 1/3% of
cost of sales. The ending inventory will increase by roughly ₱ 50,000 with a
corresponding increase in accounts payable in the amount of ₱ 30,000 by the end
of the month. How much is the budgeted payment for inventory?
a. ₱ 80,000
b. ₱ 180,000
c. ₱ 200,000
d. ₱ 260,000 3 minutes

End
16. FOLLERO Corporation will sell for the month of June, 8,000 pieces of its
merchandise at a unit price of ₱ 30. The budgeted gross profit rate is 33 1/3% of
cost of sales. The ending inventory will increase by roughly ₱ 50,000 with a
corresponding increase in accounts payable in the amount of ₱ 30,000 by the end
of the month. How much is the budgeted payment for inventory?
a. ₱ 80,000
b. ₱ 180,000
c. ₱ 200,000
d. ₱ 260,000
17. The budgeted credit sales of SOTTA Company are shown below:
November ₱ 450,000
December 460,000
January 480,000
Past collection experience shows that 60% of net credit sales are collected in
the same month of sale, 30% in the following month and 10% in the second month
following. On January 1, the accounts receivable balance is ₱ 183,000.
How much will be the balance of accounts receivable at the end
of January? 3 minutes

a. ₱ 190,000
b. ₱ 192,000
c. ₱ 193,000
d. ₱ 195,000

End
17. The budgeted credit sales of ACOSTA Company are shown below:
November ₱ 450,000
December 460,000
January 480,000
Past collection experience shows that 60% of net credit sales are collected in
the same month of sale, 30% in the following month and 10% in the second month
following. On January 1, the accounts receivable balance is ₱ 183,000.
How much will be the balance of accounts receivable at the end
of January?

a. ₱ 190,000
b. ₱ 192,000
c. ₱ 193,000
d. ₱ 195,000
18. The operating budget of PAMA Company shows sales of ₱ 216,000. Cost of
sales averages 70% of sales. The following budgetary information is also available:
Inventory, 1/1 ₱ 27,500
Inventory, 12/31 21,900
Accounts payable, 1/1 21,000
Accounts payable, 12/31 18,800
Accounts receivable, 1/1 46,000
Accounts receivable, 12/31 38,000
All year-end balances are targeted amounts. Budgeted cash 3 minutes
Payment for merchandise is
a. ₱ 147,800
b. ₱ 156,800
c. ₱ 159,000
d. ₱ 208,000

End
18. The operating budget of PAMA Company shows sales of ₱ 216,000. Cost of
sales averages 70% of sales. The following budgetary information is also available:
Inventory, 1/1 ₱ 27,500
Inventory, 12/31 21,900
Accounts payable, 1/1 21,000
Accounts payable, 12/31 18,800
Accounts receivable, 1/1 46,000
Accounts receivable, 12/31 38,000
All year-end balances are targeted amounts. Budgeted cash
Payment for merchandise is
a. ₱ 147,800
b. ₱ 156,800
c. ₱ 159,000
d. ₱ 208,000
19. DE LIMA Company manufactures card tables. The company has a policy of
maintaining a finished goods inventory equal to 40% of the next month’s planned
sales. Each card table requires 3 hours of labor. The budgeted labor rate for the
coming year is ₱ 13 per hour. Planned sales for the month of April, May, and June
are 4,000, 5,000, and 3,000 units respectively. What is DE LIMA Company’s
budgeted labor cost for May?

a. ₱ 54,600
b. ₱ 163,800 3 minutes
c. ₱ 179,400
d. ₱ 226,200

End
19. DE LIMA Company manufactures card tables. The company has a policy of
maintaining a finished goods inventory equal to 40% of the next month’s planned
sales. Each card table requires 3 hours of labor. The budgeted labor rate for the
coming year is ₱ 13 per hour. Planned sales for the month of April, May, and June
are 4,000, 5,000, and 3,000 units respectively. What is DE LIMA Company’s
budgeted labor cost for May?

a. ₱ 54,600
b. ₱ 163,800
c. ₱ 179,400
d. ₱ 226,200
20. CARAMAT Company uses flexible budgeting for cost control. CARAMAT
produced 10,800 units of product during October, incurring indirect materials
costs of ₱ 13,000. Its master budget for the year reflected indirect materials
costs of ₱ 180,000 at a production volume of 144,000 units. A flexible budget
for October production would reflect indirect materials costs of

a. ₱ 13,975
b. ₱ 13,500
c. ₱ 13,000 3 minutes
d. ₱ 11,700

End
20. CARAMAT Company uses flexible budgeting for cost control. CARAMAT
produced 10,800 units of product during October, incurring indirect materials
costs of ₱ 13,000. Its master budget for the year reflected indirect materials
costs of ₱ 180,000 at a production volume of 144,000 units. A flexible budget
for October production would reflect indirect materials costs of

a. ₱ 13,975
b. ₱ 13,500
c. ₱ 13,000
d. ₱ 11,700
21. RAMA Shoe shop is preparing its cash budget for the month of May. RAMA
pays 60% of purchases in the month of purchase and the remainder the next
month. Operational information for May is as follows:
Beginning inventory ₱ 20,000
Estimated May cost of goods sold 100,000
Estimated May ending inventory 35,000
April purchases 90,000

What is RAMA’s total estimated cash payments for shoes in May? 3 minutes
a. ₱ 115,000
b. ₱ 105,000
c. ₱ 87,000
d. ₱ 70,000

End
21. RAMA Shoe shop is preparing its cash budget for the month of May. RAMA
pays 60% of purchases in the month of purchase and the remainder the next
month. Operational information for May is as follows:
Beginning inventory ₱ 20,000
Estimated May cost of goods sold 100,000
Estimated May ending inventory 35,000
April purchases 90,000

What is RAMA’s total estimated cash payments for shoes in May?

a. ₱ 115,000
b. ₱ 105,000
c. ₱ 87,000
d. ₱ 70,000
22. SIUM Company manufactures a single product. SIUM keeps inventory of raw
materials at 50% of the coming month’s budgeted production needs. Two units of
product require six pounds of materials. The production budget is, in units:
May, 1,000; June, 1,200; July, 1,300; August, 1,600.
Determine the raw materials purchases in July.

a. 8,700 pounds
b. 3,705 pounds
c. 3,900 pounds 3 minutes
d. 4,350 pounds

End
22. SIUM Company manufactures a single product. SIUM keeps inventory of raw
materials at 50% of the coming month’s budgeted production needs. Two units of
product require six pounds of materials. The production budget is, in units:
May, 1,000; June, 1,200; July, 1,300; August, 1,600.
Determine the raw materials purchases in July.

a. 8,700 pounds
b. 3,705 pounds
c. 3,900 pounds
d. 4,350 pounds