The company Apple produces 2 types of plastic containers, type A and B. The products have following expenses on labor and material

Container A Container B

Direct material per 100 containers

Plastic X ($0.2 per kg) 30 kg 70 kg

Plastic Y ($0.1 per kg) 20 kg 30 kg

Direct labour per 100 containers (12$ per hour) 0.25 hour 0.5 hour

The following overheads are planned for the next period. The predetermined rate is based on production volume of 495,000 units of each product. Manufacturing overheads are applied on the bases of direct labor hours:

Indirect material USD 10,500

Indirect labor USD 50,000

Utilities USD 25,000

Property taxes USD 18,000

Insurance USD 16,000

Depreciation USD 29,000

Total USD 148,500

The following selling and administrative expenses are planned:

Salaries USD 75,000

Advertising USD 15,000

Management salaries USD 90,000

Other expenses USD 30,000

Below is expected level of sales:

Container A 500,000 units@ price USD 90 per 100 containers

Container A 500,000 units@ price USD 130 per 100 containers

Information on finished goods and inventory is provided below:

Expected level on Jan 1 Desired level on Dec 31

Finished goods

Container A 10,000 units 5,000 units

Container B 20,000 units 15,000 units

Raw material

Plastic X 15,000 kg 5,000 kg

Plastic Y 5,000 kg 10,000 kg

Required: Prepare master budget for the next year including income statement.

Exercise 2 Budgeting The company Apple produces 2 types of plastic containers, type A and B. The products have following expenses on labor and material Container A Container B Direct material per 100 containers Plastic X ($0.2 per kg) 30 kg 70 kg Plastic Y ($0.1 per kg) 20 kg 30 kg Direct labour per 100 containers (12$ per hour) 0.25 hour 0.5 hour The following overheads are planned for the next period. The predetermined rate is based on production volume of 495,000 units of each product. Manufacturing overheads are applied on the bases of direct labor hours: Indirect material USD 10,500 Indirect labor USD 50,000 Utilities USD 25,000 Property taxes USD 18,000 Insurance USD 16,000 Depreciation USD 29,000 Total USD 148,500 The following selling and administrative expenses are planned: Salaries USD 75,000 Advertising USD 15,000 Management salaries USD 90,000 Other expenses USD 30,000 Below is expected level of sales: ContainerA 500,000 units@ price USD 90 per 100 containers ContainerA 500,000 units@ price USD 130 per 100 containers Information on nished goods and inventory is provided below: Expected level on Jan 1 Desired level on Dec 31 Finished goods ContainerA 10,000 units 5,000 units Container B 20,000 units 15,000 units Raw material Plastic X 15,000 kg 5,000 kg Plastic Y 5,000 kg 10,000 kg Required: Prepare master budget for the next year including income statement