Reference no: EM132943093
Question - A Company is preparing its comprehensive budget for 2021. The company is a breeder and seller of fighting cocks. During 2020, there was a surge in online cockfighting as a means of amusement. The company forecasted the following sales during 2021:
1st quarter 1,500
2nd quarter 2,000
3rd quarter 1,800
4th quarter 3,000
Annual 8,300
The selling price of each rooster is P2,500. The selling price is not expected to change throughout 2021. The company also employs a Just-in-Time philosophy.
All sales are on account. The expected pattern of collection for receivables are as follows:
-30% during the quarter of sale
-50% the following quarter of sale
-20% the 2nd quarter following the saleIn order to fully breed 1 fighting rooster the company needs to feed the hens with the following:
-3 pounds of "Pampalakas" - the cost per pound is P130
-1 pound of "Pampasaya" - the cost per pound is P12210% of the feeds are paid in cash, while the rest are on account. The company pays its accounts payables to its suppliers as follows:
-20% during the quarter of purchase
-The rest in the quarter following the purchaseA fully grown rooster will need 24 hours of direct labor. The average direct labor rate per direct labor hour is P10.
The company incurs overhead using the following quarterly cost formula: y = P525,000 + P8(x); where x = direct labor hours. P125,000 of the fixed costs pertains to breeding facility depreciation.
The selling and administrative costs are as follows:
-Selling costs amounts to P15 per chicken.
-Rental of P400,000 per quarter.
-Office headquarter depreciation of P80,000 per month.
-Office salaries of P50,000 per month.Additional notes:
-All conversion costs incurred during the quarter are paid during the quarter.
-Selling and administrative costs are paid during the quarter it was incurred.
-Income tax is paid every 20th of the first month of the following year.
-The income tax rate is 30%.
-The income tax for 2020 is P1,825,000.
-The cash balance at the beginning of 2021 is P1,900,000. The company maintains a P2,000,000 minimum cash balance.
-Capital purchases were as follows:
-1st quarter - P1,300,000
-3rd quarter - P4,000,000
-The company can borrow and repay in multiples of P100,000. It borrows loans at the end of each quarter and repays its loans at the beginning of each quarter. Interest repayments are made at the end of each quarter. The interest rate is 1% per month.
Required -
-How much is the annual budgeted sales for 2021?
-How much is the budgeted cost of goods sold for 2021?
-How much of the purchases made during the 2nd quarter were paid during the 2nd quarter?
-The interest payments made during the year amounted to?
-The ending cash balance for 2021 is?