Managerial Accounts

FreshPak Corporation mattuf-actures two types of cardboard boxes used in shipping canne6 food" fruit and vegetables. ll'he canned food bor (t1'pe Cl) and the perishable food box (type P) have the following material and labor requirements.

Chapter I Profit Planning and Activity-Based Budgeting 393 .,'-.:r'1.:1.i

rilli:i:::il':l+::'i :, - ai -froblemHS. rrSuraflon of Maiter gudset

{L0 2,3,4}

1. Total sales revenuer

$1 ,r 00,000

3. Cost of purchases (paper-

board): $97,000 5. Total overhead: $148 500 7, Fredetermined overhead

rate: $40 per hour

Direct fialerial required per 1 00 boxes:

Paperboard ($.20 per pound)

Corrugating medium ($.1 0 per pound)

Direcl labor required per 1 00 boxes ($l 2.00 per hour)

30 pounds

20 pounds

25 hour

Ei

70 pounds

30 pounds

.50 hour

The lbllowing manulbcturing-overhead costs are anticipated lorthe nert 1ear. The predeternrined overhead rate is based on a production volume ol 495.000 units lbr each t1,pe o1'box. Manr.rlacturilg overhead is applied on the basis ofdirect-labor hours.

lndirect rnaterral $ 1 0,500 50,000

25,000

I 8,000

1 6,000

29,000

qiq!00

$ 75,000 r 5,000

90,000

26,000

4,000

$rl_q!oo

Property taxes

lnsrrance

Deprecialiol

'l-he following selling and administrative expenses are anticipated for the next year.

Salaries and fringe beneftts of sales personnel ..........,.,.,.,

Management salaries and {ringe benef its,...,,,,,.......

fuliscellaneous administratrve expenses,..,.,.,.,.,.

The salcs forecast for lhe next vear is as fbllorvs:

Box type C .. 500,000 boxes $ 90.00 per hundred boxss Box \pe P .,.. 500.000 boxes 1 30.00 per hundred boxes

'[he fbllorving inventory information is available fbr thc next year. 'l'he unit production costs fbr each product are expected to be the same this year and next 1.ear.

Epsclod Unmrbry Beslred Endfirg hflfi@ Jarudl 1 lhcsmbcr Il

Finished goods:

Box type C

Box type P

Raw materral:

Paperboard .....,,.....

Corrugating mediunr

1 0,000 boxes

20,000 boxes

1 5,000 pounds

5 000 pounds

5,000 boxes

I 5,000 boxes

5,000 pounds

1 0,000 pounds

Required: Prepare a nraster budget fbr FreshPak Corp<lration for the next year. Assume an inuonlc tax rate ol 40 percent. lnclude the follorving sohedules. l. Sales budget. 2. Production budget. 3. Direct-material budget. 4. Direct-laborbudget. 5. Manutacturing-overhead budget. 6. Selling and administrative expense budget. 7. Budgeted income statement. (Hint;Ib detemrine cost ol'goods sold. flrst compule the manufbctur-

ing cost per unit fbr each type ofbox. lnclucle applied manufircturing overheati in the cost.)

Tntel