Considered uncollectible merchandise purchases are

considered uncollectible
Merchandise purchases are generally paid as follows:
50% within the month they are incurred.
50% after the month they are incurred
Ending inventory in units (cost per unit is P40) is 30% higher than the following month’s sales in
units. Operating expenses are on cash basis and are estimated to be 15% of the current month’s
sales including monthly depreciation of P10,000.
As of June 30, 1988, Accounts Receivable balance was P630,000 and Merchandise Inventory
was P565,000.
27. The budgeted cash collections for the month of July would be
a. P547,500 b. P539,520 c. P556,020 d. P391,020
28. The budgeted cash payments of the month of September would be
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29. The projected net income for September would be
30. The balance of accounts receivable at the end of July, assuming that no uncollectible
accounts are written off for July would be (VD)
Questions 31 thru 38 are based on the following information.
The following information has been gathered by the Budget Director of the Kareton Company,
another outfit managed by the Masugid Company. The firm manufactures and sells only one
product. The selling price during the coming month is expected to be the prevailing price of P5
per unit. Expected sales during the month is a total of 75,000 units of finished goods. Finished
goods expected to be on hand at the end of the month total 50,000 units. Finished goods
expected to be on hand at the beginning of he month total 42,000 units.
Direct labor cost is P3.00 per hour. One-fourth an hour of direct labor is required to manufacture
each unit of finished product.
Factory overhead is applied to work-in-process on the basis of direct labor hours. Variable
factory expenses at the planned level of operations is expected to amount to P33,200; fixed
overhead is expected to amount to P99,600.
The raw materials expected to be on hand at the beginning of the month total 5,000 gallons.
Only one kind of raw material is used to produce the finished goods. One and one-half gallons
of raw material are needed to manufacture each unit of finished product. Raw materials are
expected to cost P0.18 per gallon during the coming month, its prevailing cost. Raw materials
expected to be on hand at the end of the month total 8,000 gallons.
Variable administrative and selling expenses is P1.00 per unit.
In assisting the company to formulate the budget, you determined the following budget
parameters.
31. Budgeted cost of raw materials to be used in production is
a. P124,500 b. P14,940 c. P8,910 d. P22,410