Required information PR 9-42 (Algo) Preparation of Master Budget (LO 9-3, 9-4, 9-5) [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 с P 50 pounds 40 0.35 90 pounds 50 pounds 0.70 hour pounds 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 per hundred boxes 175.00 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. Expected Inventory Desired Ending Inventory Finished goods: Box type C Box type P Raw material: Paperboard Corrugating medium January 1 December 31 20,000 boxes 15,000 boxes 30,000 boxes 25,000 boxes 13,000 pounds 4,000 pounds 3,000 pounds 9,000 pounds Prepare a master budget for FreshPak Corporation for the next year. Assume an income tax rate of 40 percent. PR 9-42 (Algo) Part 7: Prepare the budgeted income statement for the next year. 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. Answer is complete but not entirely correct. Sales revenue Less: Cost of goods sold $1,290,500 518,700 Gross margin $ 771,800 x Selling and administrative expenses Income before taxes Income tax expense Net income 351,000 $ 420,800 168,320 $ 252,480

Required information PR 9-42 (Algo) Preparation of Master Budget (LO 9-3, 9-4, 9-5) [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 с P 50 pounds 40 0.35 90 pounds 50 pounds 0.70 hour pounds 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 per hundred boxes 175.00 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. Expected Inventory Desired Ending Inventory Finished goods: Box type C Box type P Raw material: Paperboard Corrugating medium January 1 December 31 20,000 boxes 15,000 boxes 30,000 boxes 25,000 boxes 13,000 pounds 4,000 pounds 3,000 pounds 9,000 pounds Prepare a master budget for FreshPak Corporation for the next year. Assume an income tax rate of 40 percent. PR 9-42 (Algo) Part 7: Prepare the budgeted income statement for the next year. 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. Answer is complete but not entirely correct. Sales revenue Less: Cost of goods sold $1,290,500 518,700 Gross margin $ 771,800 x Selling and administrative expenses Income before taxes Income tax expense Net income 351,000 $ 420,800 168,320 $ 252,480

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter9: Profit Planning And Flexible Budgets

Section: Chapter Questions

Problem 68P: Use the following information for Problems 9-67 through 9-69: Ladan Suriman, controller for Healthy...

See similar textbooks