Chapter 9, Problem 9.2AP

Deleon Inc. is preparing its annual budgets for the year ending December 31, 2017. Accounting assistants furnish the data shown below.

	Product JB 50	Product JB 60
Sales budget:
Anticipated volume in units	400,000	200,000
Unit selling price	$20	$25
Production budget:
Desired ending finished goods units	30,000	15,000
Beginning finished goods units	25,000	10,000
Direct materials budget:
Direct materials per unit (pounds)	2	3
Desired ending direct materials pounds	30,000	10,000
Beginning direct materials pounds	40,000	15,000
Cost per pound	$3	$4
Direct labor budget:
Direct labor time per unit	0.4	0.6
Direct labor rate per hour	$12	$12
Budgeted income statement:
Total unit cost	$13	$20

An accounting assistant has prepared the detailed manufacturing overhead budget and the selling and administrative expense budget. The latter shows selling expenses of $560,000 for product JB 50 and $360,000 for product JB 60. and administrative expenses of $540.000 for product JB 50 and $340,000 for product JB 60. Interest expense is $150,000 (not allocated to products). Income taxes are expected to be 30%.

Instructions

Prepare the following budgets for the year. Show data for each product. Quarterly budgets should not be prepared.

(a) Sales.

(b) Production.

(c) Direct materials.

(d) Direct labor.

(e) Multiple-step income statement (Note: income taxes are not allocated to the products).