Required information 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 ($0.36 per pound) 35 pounds 75 pounds Corrugating medium ($0.18 per pound) 25 pounds 35 pounds Direct labor required per 100 boxes ($18.00 per hour) 0.40 hour P 0.20 hour The following production-overhead costs are anticipated for the next year. The predetermined overhead rate is based on a production volume of 450,000 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 $ 13,650 87,950 40, 500 27,000 20,000 48,500 $ 237,600 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 $130,500 28,500 147,000 45,000 7,200 $358,200 The sales forecast for the next year is as follows: Box type c Box type B Sales Volume 455,000 boxes 455,000 boxes Sales Price $125.00 per hundred boxes 185.00 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 Desired Ending Inventory January 1 December 31 Finished goods : Box type C 11,500 boxes 6,500 boxes Box type P 21,500 boxes 16,500 boxes Raw material: Paperboard 14,000 pounds 4,000 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.) Answer is not complete. Sales revenue $ 1,410,500 Less: Cost of goods sold Gross margin Selling and administrative expenses 358,200 Income before taxes Income tax expense Net income