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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

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 ($0.34 per pound) 30 pounds 70 pounds
Corrugating medium ($0.17 per pound) 20 pounds 30 pounds
Direct labor required per 100 boxes ($17.00 per hour) 0.40 hour 0.80 hour

The following production-overhead costs are anticipated for the next year. The predetermined overhead rate is based on a production volume of 445,000 units for each type of box. Production overhead is applied on the basis of direct-labor hours.

Indirect material $ 13,500
Indirect labor 74,440
Utilities 39,000
Property taxes 26,000
Insurance 19,000
Depreciation 47,000
Total $ 218,940

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

Salaries and fringe benefits of sales personnel $ 129,000
Advertising 28,000
Management salaries and fringe benefits 146,000
Clerical wages and fringe benefits 44,500
Miscellaneous administrative expenses 7,100
Total $ 354,600

The sales forecast for the next year is as follows:

Sales Volume Sales Price
Box type C 450,000 boxes $ 120.00 per hundred boxes
Box type P 450,000 boxes 180.00 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 10,500 boxes 5,500 boxes
Box type P 20,500 boxes 15,500 boxes
Raw material:
Paperboard 13,500 pounds 3,500 pounds
Corrugating medium 4,500 pounds 9,500 pounds

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

7. Prepare the budgeted income statement for the next year.

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