FreshPak Corporation manufactures two types of cardboard boxes used in shipping canned food, fruit, and vegetables. The canned food box (type C) and the perishable food box (type P) have the following material and labor requirements. Direct material required per 100 boxes: Paperboard ($0.32 per pound) Corrugating medium ($0.16 per pound) Direct labor required per 100 boxes ($16.00 per hour) Type of Box 50 pounds 40 pounds 0.35 hour 90 pounds 50 pounds 0.70 hour The following production-overhead costs are anticipated for the next year. The predetermined overhead rate is based on a production volume of 440,000 units for each type of box. Production overhead is applied on the basis of direct-labor hours. Indirect material Indirect labor Utilities Property taxes Insurance Depreciation Total $ 13,350 91,650 37,500 25,000 18,000 45,500 $ 231,000 The following selling and administrative expenses are anticipated for the next year. Salaries and fringe benefits of sales personnel Advertising Management salaries and fringe benefits Clerical wages and fringe benefits Miscellaneous administrative expenses Total The sales forecast for the next year is as follows: $ 127,500 27,500 145,000 44,000 7,000 $ 351,000 Box type C Box type P Sales Volume 445,000 boxes 445,000 boxes Sales Price $ 115.00 175.00 per hundred boxes per hundred boxes The following inventory information is available for the next year. The unit production costs for each product are expected to be the same this year and next year. Expected Inventory January 1 Desired Ending Inventory December 31 Finished goods: Box type C Box type P Raw material: Paperboard Corrugating medium 20,000 boxes 30,000 boxes 15,000 boxes 25,000 boxes 13,000 pounds 4,000 pounds 3,000 pounds 9,000 pounds Prepare a master budget for Fresh Pak Corporation for the next year. Assume an income tax rate of 40 percent.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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7. Prepare the budgeted income statement for the next year. (Hint. To determine cost of goods sold, first compute the production cost
per unit for each type of box. Include applied production overhead in the cost.)
Note: Do not round intermediate calculations.
Transcribed Image Text:7. Prepare the budgeted income statement for the next year. (Hint. To determine cost of goods sold, first compute the production cost per unit for each type of box. Include applied production overhead in the cost.) Note: Do not round intermediate calculations.
Required information
[The following information applies to the questions displayed below.]
FreshPak Corporation manufactures two types of cardboard boxes used in shipping canned food, fruit, and vegetables.
The canned food box (type C) and the perishable food box (type P) have the following material and labor requirements.
Direct material required per 100 boxes:
Paperboard ($0.32 per pound)
Corrugating medium ($0.16 per pound)
Direct labor required per 100 boxes ($16.00 per hour)
Type of Box
50 pounds
90 pounds
40
0.35
pounds
hour
50 pounds
0.70 hour
The following production-overhead costs are anticipated for the next year. The predetermined overhead rate is based on
a production volume of 440,000 units for each type of box. Production overhead is applied on the basis of direct-labor
hours.
Indirect material
Indirect labor
Utilities
Property taxes
Insurance
Depreciation
Total
$ 13,350
91,650
37,500
25,000
18,000
45,500
$ 231,000
The following selling and administrative expenses are anticipated for the next year.
Salaries and fringe benefits of sales personnel
Advertising
Management salaries and fringe benefits
Clerical wages and fringe benefits
Miscellaneous administrative expenses
Total
The sales forecast for the next year is as follows:
$ 127,500
27,500
145,000
44,000
7,000
$ 351,000
Box type C
Box type P
Sales Volume
445,000 boxes
445,000 boxes
$ 115.00
175.00
Sales Price
per hundred boxes
per hundred boxes
The following inventory information is available for the next year. The unit production costs for each product are expected
to be the same this year and next year.
Finished goods:
Box type C
Expected Inventory
January 1
Desired Ending Inventory
December 31
15,000 boxes
Box type P
Raw material:
Paperboard
Corrugating medium
20,000 boxes
30,000 boxes
25,000 boxes
13,000 pounds
3,000 pounds
4,000 pounds
9,000 pounds
Prepare a master budget for FreshPak Corporation for the next year. Assume an income tax rate of 40 percent.
Transcribed Image Text:Required information [The following information applies to the questions displayed below.] FreshPak Corporation manufactures two types of cardboard boxes used in shipping canned food, fruit, and vegetables. The canned food box (type C) and the perishable food box (type P) have the following material and labor requirements. Direct material required per 100 boxes: Paperboard ($0.32 per pound) Corrugating medium ($0.16 per pound) Direct labor required per 100 boxes ($16.00 per hour) Type of Box 50 pounds 90 pounds 40 0.35 pounds hour 50 pounds 0.70 hour The following production-overhead costs are anticipated for the next year. The predetermined overhead rate is based on a production volume of 440,000 units for each type of box. Production overhead is applied on the basis of direct-labor hours. Indirect material Indirect labor Utilities Property taxes Insurance Depreciation Total $ 13,350 91,650 37,500 25,000 18,000 45,500 $ 231,000 The following selling and administrative expenses are anticipated for the next year. Salaries and fringe benefits of sales personnel Advertising Management salaries and fringe benefits Clerical wages and fringe benefits Miscellaneous administrative expenses Total The sales forecast for the next year is as follows: $ 127,500 27,500 145,000 44,000 7,000 $ 351,000 Box type C Box type P Sales Volume 445,000 boxes 445,000 boxes $ 115.00 175.00 Sales Price per hundred boxes per hundred boxes The following inventory information is available for the next year. The unit production costs for each product are expected to be the same this year and next year. Finished goods: Box type C Expected Inventory January 1 Desired Ending Inventory December 31 15,000 boxes Box type P Raw material: Paperboard Corrugating medium 20,000 boxes 30,000 boxes 25,000 boxes 13,000 pounds 3,000 pounds 4,000 pounds 9,000 pounds Prepare a master budget for FreshPak Corporation for the next year. Assume an income tax rate of 40 percent.
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