Problem 9-42 Preparation of Master Budget (LO 9-3, 9-4, 9-5) [The following information applies to the questions displayed below. 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 Direct material required per 100 boxes: Paperboard ($0.34 per pound) Corrugating medium ($0.17 per pound) Direct labor required per 100 boxes ($17.00 per hour) 30 pounds 20 pounds 0.40 hour 70 pounds 30 pounds 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 Indirect labor Utilities Property taxes Insurance Depreciation Total $ 13,500 74,440 39,000 26,000 19,000 47,000 $ 218,940 The following selling and administrative expenses are anticipated for the next year. Salaries and fringe benefits of sales personnel Advertising Management salaries and fringe benefits Clerical wages and fringe benefits Miscellaneous administrative expenses Total $129,000 28,000 146,000 44,500 7,100 $354,600 The sales forecast for the next year is as follows: Box type C Box type P Sales Volume 450,000 boxes 450,000 boxes Sales Price $120.00 per hundred 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 Box type P Raw material: Paperboard Corrugating medium 10,500 boxes 20,500 boxes 5,500 boxes 15,500 boxes 13,500 pounds 4,500 pounds 3,500 pounds 9,500 pounds Prepare a master budget for FreshPak Corporation for the next year. Assume an income tax rate of 40 percent. Problem 9-42 Part 1 Required: 1. Prepare the sales budget for the next year. (Round "Sales price per unit" to 2 decimal places.) Box C Box P Total Sales (in units) Sales price per unit Sales revenue Problem 9-42 Part 2 2. Prepare the production budget for the next year. Box C Box P Sales Total units needed Production requirements Problem 9-42 Part 3 3-a. Prepare the direct-material budget for paperboard. 3-b. Prepare the direct-material budget for corrugating medium. Complete this question by entering your answers in the tabs below. Req 3A Req 3B Prepare the direct-material budget for paperboard. Box P Total Paperboard Box C Production requirement (number of boxes) Raw material required per box (pounds) 0.30 Raw material required for production (pounds) 0.70 3,500 Total raw-material needs Raw material to be purchased Price (per pound) Cost of purchases (paperboard) S 0.34 Req Reg 3B Prepare the direct-material budget for corrugating medium. Box P Total Corrugating Medium Box C Production requirements (number of boxes) Raw material required per box (pounds) 0.20 Raw material required for production (pounds) 0.30 9,500 Total raw-material needs Raw material to be purchased Price (per pound) Cost of purchases (corrugating medium) S 0.17 Problem 9-42 Part 4 4. Prepare the direct-labor budget for the next year. (Do not round intermediate calculations. Round "Direct labor required per box (hours)" to 4 decimal places.) Box C Box P Total Production requirements (number of boxes) Direct labor required per box (hours) Direct labor required for production (hours) Direct-labor rate Total direct-labor cost 5. Prepare the production-overhead budget for the next year. Total production overhead Problem 9-42 Part 6 6. Prepare the selling and administrative expense budget for the next year. Total selling and administrative expenses Problem 9-42 Part 7 7. Prepare the budgeted income statement for the next year. (Do not round intermediate calculations.)
