[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. Type of Box C P Direct material required per 100 boxes: Paperboard ($0.36 per pound) 40 pounds 80 pounds Corrugating medium ($0.18 per pound) 30 pounds 40 pounds Direct labor required per 100 boxes ($18.00 per hour) 0.30 hour 0.60 hour The following production-overhead costs are anticipated for the next year. The predetermined overhead rate is based on a production volume of 485,000 units for each type of box. Production overhead is applied on the basis of direct-labor hours. Indirect material $ 14,700 Indirect labor 76,200 Utilities 51,000 Property taxes 34,000 Insurance 27,000 Depreciation 59,000 Total $ 261,900 The following selling and administrative expenses are anticipated for the next year. Salaries and fringe benefits of sales personnel $ 141,000 Advertising 32,000 Management salaries and fringe benefits 154,000 Clerical wages and fringe benefits 48,500 Miscellaneous administrative expenses 7,900 Total $ 383,400 The sales forecast for the next year is as follows: Sales Volume Sales Price Box type C 490,000 boxes $ 130.00 per hundred boxes Box type P 490,000 boxes 190.00 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 January 1 Desired Ending Inventory December 31 Finished goods: Box type C 18,500 boxes 13,500 boxes Box type P 28,500 boxes 23,500 boxes Raw material: Paperboard 17,500 pounds 7,500 pounds Corrugating medium 8,500 pounds 13,500 pounds Prepare a master budget for FreshPak Corporation for the next year. Assume an income tax rate of 35 percent. 5. Prepare the production-overhead budget for the next year.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
[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.
| Type of Box | ||||||||
| C | P | |||||||
| Direct material required per 100 boxes: | ||||||||
| Paperboard ($0.36 per pound) | 40 | pounds | 80 | pounds | ||||
| Corrugating medium ($0.18 per pound) | 30 | pounds | 40 | pounds | ||||
| Direct labor required per 100 boxes ($18.00 per hour) | 0.30 | hour | 0.60 | hour | ||||
The following production-
| Indirect material | $ | 14,700 | |
| Indirect labor | 76,200 | ||
| Utilities | 51,000 | ||
| Property taxes | 34,000 | ||
| Insurance | 27,000 | ||
| 59,000 | |||
| Total | $ | 261,900 | |
The following selling and administrative expenses are anticipated for the next year.
| Salaries and |
$ | 141,000 | |
| Advertising | 32,000 | ||
| Management salaries and fringe benefits | 154,000 | ||
| Clerical wages and fringe benefits | 48,500 | ||
| Miscellaneous administrative expenses | 7,900 | ||
| Total | $ | 383,400 | |
The sales
| Sales Volume | Sales Price | ||||||
| Box type C | 490,000 | boxes | $ | 130.00 | per hundred boxes | ||
| Box type P | 490,000 | boxes | 190.00 | 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 January 1 | Desired Ending Inventory December 31 | ||||
| Finished goods: | |||||
| Box type C | 18,500 | boxes | 13,500 | boxes | |
| Box type P | 28,500 | boxes | 23,500 | boxes | |
| Raw material: | |||||
| Paperboard | 17,500 | pounds | 7,500 | pounds | |
| Corrugating medium | 8,500 | pounds | 13,500 | pounds | |
Prepare a
5. Prepare the production-overhead budget for the next year.
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