Question
Deleon Inc. is preparing its annual budgets for the year ending December 31, 2022. Accounting assistants furnish the following data. Product JB 50 Product JB
Deleon Inc. is preparing its annual budgets for the year ending December 31, 2022. Accounting assistants furnish the following data.
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 20%.
Instructions
Prepare the following budgets for the year. Show data for each product. Quarterly budgets should not be prepared.
- Sales.
a. Total sales $13,000,000
- Production.
b. Required production units: JB 50, 405,000 JB 60, 205,000
- Direct materials.
c. Total cost of direct materials purchases $4,840,000
- Direct labor.
d. Total direct labor cost $3,420,000
- Multiple-step income statement (Note: income taxes are not allocated to the products).
e. Net income $1,480,000
Prepare sales and production budgets and compute cost per unit under two plans.
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