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 P Direct material required per 100 boxes: Paperboard ($0.28 per pound) Corrugating medium ($0.14 per pound) Direct labor required per 100 boxes ($14.00 per hour) 35 pounds 25 pounds 0.20 hour 75 pounds 35 pounds 0.40 hour The following production-overhead costs are anticipated for the next year. The predetermined overhead rate is based on a production volume of 395,000 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 $ 12,000 45,050 30,000 20,000 15,000 32,000 $154,050 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 $ 114,000 23,000 136,000 39,500 6,100 $318,600 The sales forecast for the next year is as follows: Box type C Box type P Sales Volume 400,000 boxes 400,000 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 11,000 boxes 21,000 boxes 6,000 boxes 16,000 boxes Finished goods: Box type C Box type P Raw material: Paperboard Corrugating medium 15,500 pounds 5,500 pounds 5,500 pounds 10,500 pounds Prepare a master budget for Fresh Pak Corporation for the next year. Assume an income tax rate of 30 percent. Problem 9-42 Part 7 7. Prepare the budgeted income statement for the next year. (Do not round intermediate calculations.) Sales revenue $ 1,200,000 339,970 Less: Cost of goods sold Gross margin Selling and administrative expenses Income before taxes 318,600 Income tax expense Net income