Strategic Cost Management
Assignment 3
Exercise 1 (Schedule of Expected Cash Collection)
July August September
Budgeted Sales 600,000 900,000 500,000
20% of month's sales are collected in the month of sale
70% is collected in the month following sale
10% is collected in the second month following sale
May sales totaled 430,000
June sales totaled 540,000
Required:
1. Prepare a schedule of expected cash collections from sales, by month and in total, for the
May June July
20% 86,000 108,000 120,000
70% 301,000 378,000
10% 43,000
Total 86,000 409,000 541,000
2. Assume that the company will prepare a budgeted statement of financial position as of September 30
Accounts Receivable - September 30.
August 900,000 10%
September 500,000 80%
Total Accounts Receivable
Exercise 2 (Production Budget)
Sales in Units
July 30,000
August 45,000
September 60,000
October 50,000
10% of Finished Goods in next month sales
3,000 units end of June inventory
Required
Prepare a production budget for the third quarter showing the number of units to be produced each month and for th
July August September
Budgeted Sales 30,000 45,000 60,000
10% 4,500 6,000 5000
Total Units 34,500 51,000.00 65,000
Less: 3,000 4,500 6,000
Total Units 31,500 46,500.00 59,000
Exercise 3 (Materials Purchase Budget)
Year 2
First Second
Budgeted production calculators in 60,000 90,000
Each Calculator req. 3 small "chips" that cost 200 each
20% the inventory of chips at the end of the quarter
36,000 chips will be hand to start the 1st quarter of Year 2
Required:
Prepare a material purchases budget for chips, by quarter and in total, for Year 2. At bottom of your budget, show th
First Second
Budgeted production calculator 60,000 90,000
# of chips 3 3
Total chips in production 180,000 270,000
20% 54000 90000
Total Direct Material 234,000 360,000
Less: 36,000 54000
Req. purchase of chips 198,000 306,000
Cost per chip 200 200
Req. purchase of chips in Peso 39,600,000 61,200,000
Exercise 4 (Direct Labor Budget)
1st quarter 2nd quarter
Units to be produced 5,000 4,400
Each unit req. 0.40 direct labor hours
11 per hour direct labor hour workers
Reuired:
1. Construct the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor work for
1st quarter 2nd quarter
Units to be produce 5,000 4,400
Direct labor hours 0.4 0.4
Total of direct labor hours 2,000 1,760
Direct labor hours worker paid 11 11
Total Direct Labor Budget 22,000 19,360
2. Construct the company's direct labor budget for the upcoming fical year, assuming that the direct labor work forc
Instead, assume that the company's direct labor work force consistsof permanent employees who are guaranteed to b
the workers are paid for 1,800 hours anyway. Any hours worked in excess of 1,800 hours in a quarter are paid at the
Units to be produce 5,000 4,400
Direct labor hours 0.4 0.4
Total of direct labor hours 2,000 1,760
Guaranteed hours of work 1,800 1,800
Direct labor hours worker paid 11 11
Total guaranteed hours 19,800 19,800
Overtime hours 200 0
rate for overtime hour 16.5 16.5
3,300 -
Total Direct Labor Budget 23,100 19,800
Exercise 5 (Manufacturing Overhead Budget)
1st quarter 2nd quarter
Budgeted Direct labor hours 5,000 4,800
1.75 manufacturing overhead rate per direct labor hour
35,000 per quarter; company's fixed manufacturing overhead
15,000 per quarter; The only noncash item included in the fixed manufacturing overhead is depreciation
Required:
1. Construct the companys MOB for the upcoming fiscal year
1st quarter 2nd quarter 3rd quarter
5,000 4,800 5,200
VMOHR per DLH 1.75 1.75 1.75
Total VMOHR 8,750 8,400 9,100
FMOH 35,000 35,000 35,000
Total MOH 43,750 43,400 44,100
2. Compute the company's MOHR (including both variable & FMOH) for the upcoming fiscal year. Round off to th
Total
2,000,000
rom sales, by month and in total, for the third year.
August September
180,000 100,000
420,000 630,000
54,000 60,000
654,000 790,000
ent of financial position as of September 30. Compute the accounts receivables as of that date.
90,000
400,000
490,000
units to be produced each month and for the quarter in total.
Quarter October
135,000 50,000
5000
140,000
3,000
137,000
Year 2 Year 3
Third Fourth First
150,000 100,000 80,000
r Year 2. At bottom of your budget, show the peso amount of purchases for each quarter and for the year in total
Third Fourth
150,000 100,000
3 3
450,000 300,000
60000 48,000
510,000 348,000
90000 60000
420,000 288,000
200 200
84,000,000 57,600,000
3rd quarter 4th quarter
4,500 4,900
ear, assuming that the direct labor work force is adjusted each quarter to match the number of hours req. to produce the forecasted number o
3rd quarter 4th quarter Year
4,500 4,900 18,800
0.4 0.4 0.4
1,800 1,960 7,520
11 11 11
19,800 21,560 82,720
ar, assuming that the direct labor work force is not adjusted each quarter.
rmanent employees who are guaranteed to be paid for atleast 1,800 hours of work of each quarter. If the number of req. direct labor hours is
ss of 1,800 hours in a quarter are paid at the rate of 1.5 times the normal hourly rate for direct labor.
4,500 4,900 18,800
0.4 0.4 0.4
1,800 1,960 7,520
1,800 1,800 7,200
11 11 11
19,800 19,800 79,200
0 160 360
16.5 16.5 16.5
- 2,640 5,940
19,800 22,440 85,140
3rd quarter 4th quarter
5,200 5,400
cturing overhead is depreciation
4th quarter Year
5,400 20,400
1.75 1.75
9,450 35700
35,000 140,000
44,450 175,700
or the upcoming fiscal year. Round off to the nearest whole centavos 8.6127
ce the forecasted number of units produced.
of req. direct labor hours is less than this number,
