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) 30pounds 70pounds Corrugating medium ($0.10 per pound) 20pounds 30pounds Direct labor required per 100 boxes ($12.00 per hour) 0.25hour 0.50hour

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 PriceBox type C 500,000boxes $90.00per hundred boxesBox type P 500,000boxes 130.00per 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 1Desired Ending Inventory December 31Finished goods: Box type C 10,000boxes 5,000boxes Box type P 20,000boxes 15,000boxes Raw material: Paperboard 15,000pounds 5,000pounds Corrugating medium 5,000pounds 10,000pounds

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

Problem 9-42 Part 7

7. Prepare the budgeted income statement for the next year. (Do not round intermediate calculations.)