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 ($0.20 per pound) 30 pounds 70 pounds Corrugating medium ($0.10 per pound) 20 pounds 30 pounds Direct labor required per 100 boxes ($12.00 per hour) 0.25 hour 0.50 hour The following production-overhead costs are anticipated for the next year. The predetermined overhead rate is based on a production volume of 495,000 units for each type of box. Production overhead is applied on the basis of direct-labor hours. Indirect material $ 10,500 Indirect labor 50,000 Utilities 25,000 Property taxes 18,000 Insurance 16,000 Depreciation 29,000 Total $ 148,500 The following selling and administrative expenses are anticipated for the next year. Salaries and fringe benefits of sales personnel $ 75,000 Advertising 15,000 Management salaries and fringe benefits 90,000 Clerical wages and fringe benefits 26,000 Miscellaneous administrative expenses 4,000 Total $ 210,000 The sales forecast for the next year is as follows: Sales Volume Sales Price Box type C 500,000 boxes $ 90.00 per hundred boxes Box type P 500,000 boxes 130.00 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 10,000 boxes 5,000 boxes Box type P 20,000 boxes 15,000 boxes Raw material: Paperboard 15,000 pounds 5,000 pounds Corrugating medium 5,000 pounds 10,000 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. (Do not round intermediate calculations.) Include: Sales revenue Less: Cost of goods sold Gross margin Selling and administrative expenses Income before taxes Income tax expense Net income