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: Type C Type P Paperboard ( $0.20 per pound) 30 pounds 70 pounds Corrugating medium ( $0.10 per pound) 20 pounds 30 pounds Direct labor required per 100 boxes ($12.00 per hour) 0.25 hour 0.50 hour The following production-overhead costs are anticipated for the next year. The predetermined overhead rate is based on a production volume of 495,000 units for each type of box. Production overhead is applied on the basis of direct labor hours. Indirect material $10,500 Indirect labor $50,000 Utilities $25,000 Property taxes $18,000 Insurance $16,000 Depreciation $29,000 Total $148,500 The following selling and administrative expenses are anticipated for the next year. Salaries and fringe benefits of sales personnel $75,000 Advertising $15,000 Management salaries and fringe benefits $90,000 Clerical wages and fringe benefits $26,000 Miscellaneous administrative expenses $4,000 Total $210,000 The sales forecast for the next year is as follows: Sales Volume Sales price Box Type C 500,000 boxes $90.00 per hundred boxes Box Type P 500,000 boxes $130.00 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: Expected Inventory January 1 Desired ending Inventory December 31 Box Type C 10,000 boxes 5,000 boxes Box Type P 20,000 boxes 15,000 boxes Raw Material: Paperboard 15,000 pounds 5,000 pounds Corrugating medium 5,000 pounds 10,000 pounds Prepare a master budget for FreshPak Corporation for the next year. Assume an income tax rate of 40 percent. Include the following schedules. 1) Sales budget 2) Production budget.

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: Type C Type P Paperboard ( $0.20 per pound) 30 pounds 70 pounds Corrugating medium ( $0.10 per pound) 20 pounds 30 pounds Direct labor required per 100 boxes ($12.00 per hour) 0.25 hour 0.50 hour The following production-overhead costs are anticipated for the next year. The predetermined overhead rate is based on a production volume of 495,000 units for each type of box. Production overhead is applied on the basis of direct labor hours. Indirect material $10,500 Indirect labor $50,000 Utilities $25,000 Property taxes $18,000 Insurance $16,000 Depreciation $29,000 Total $148,500 The following selling and administrative expenses are anticipated for the next year. Salaries and fringe benefits of sales personnel $75,000 Advertising $15,000 Management salaries and fringe benefits $90,000 Clerical wages and fringe benefits $26,000 Miscellaneous administrative expenses $4,000 Total $210,000 The sales forecast for the next year is as follows: Sales Volume Sales price Box Type C 500,000 boxes $90.00 per hundred boxes Box Type P 500,000 boxes $130.00 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: Expected Inventory January 1 Desired ending Inventory December 31 Box Type C 10,000 boxes 5,000 boxes Box Type P 20,000 boxes 15,000 boxes Raw Material: Paperboard 15,000 pounds 5,000 pounds Corrugating medium 5,000 pounds 10,000 pounds Prepare a master budget for FreshPak Corporation for the next year. Assume an income tax rate of 40 percent. Include the following schedules. 1) Sales budget 2) Production budget.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Direct material required per 100 boxes:	Type C	Type P
Paperboard ( $0.20 per pound)	30 pounds	70 pounds
Corrugating medium ( $0.10 per pound)	20 pounds	30 pounds
Direct labor required per 100 boxes ($12.00 per hour)	0.25 hour	0.50 hour

The following production-overhead costs are anticipated for the next year. The predetermined overhead rate is based on a production volume of 495,000 units for each type of box. Production overhead is applied on the basis of direct labor hours.

Indirect material	$10,500
Indirect labor	$50,000
Utilities	$25,000
Property taxes	$18,000
Insurance	$16,000
Depreciation	$29,000
Total	$148,500

The following selling and administrative expenses are anticipated for the next year.

Salaries and fringe benefits of sales personnel	$75,000
Advertising	$15,000
Management salaries and fringe benefits	$90,000
Clerical wages and fringe benefits	$26,000
Miscellaneous administrative expenses	$4,000
Total	$210,000

The sales forecast for the next year is as follows:

	Sales Volume	Sales price
Box Type C	500,000 boxes	$90.00 per hundred boxes
Box Type P	500,000 boxes	$130.00 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:	Expected Inventory January 1	Desired ending Inventory December 31
Box Type C	10,000 boxes	5,000 boxes
Box Type P	20,000 boxes	15,000 boxes
Raw Material:
Paperboard	15,000 pounds	5,000 pounds
Corrugating medium	5,000 pounds	10,000 pounds

Prepare a master budget for FreshPak Corporation for the next year. Assume an income tax rate of 40 percent. Include the following schedules.

1) Sales budget

2) Production budget.

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