Required information [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 ($0.20 per pound) Corrugating medium ($0.10 per pound) 30 pounds 70 pounds Direct labor required per 100 boxes ($12.00 per hour) 20 pounds 0.25 hour 30 pounds 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 Indirect labor Utilities Property taxes Insurance Depreciation Total $ 10,500 50,000 25,000 18,000 16,000 29,000 $148,500 The following selling and administrative expenses are anticipated for the next year. Salaries and fringe benefits of sales personnel Advertising $ 75,000 15,000 Management salaries and fringe benefits Clerical wages and fringe benefits Miscellaneous administrative expenses Total 90,000 26,000 4,000 $210,000 The sales forecast for the next year is as follows: Sales Volume Sales Price Box type C Box type P 500,000 boxes $ 90.00 per hundred boxes 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. Desired Ending Inventory December 31 5,000 boxes Expected Inventory January 1 Finished goods: Box type C Box type P Raw material: Paperboard 10,000 boxes 20,000 boxes 15,000 boxes 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.) Sales revenue Less: Cost of goods sold Gross margin Selling and administrative expenses Income before taxes Income tax expense Net income