FreshPak Corporation manufactures two types of cardboard boxes used in shipping
ID: 2381362 • Letter: F
Question
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
C P
Direct material required per 100 boxes:
Paperboard ($.20 per pound) ......................................................................................... 30 pounds 70 pounds
Corrugating medium ($.10 per pound) ........................................................................... 20 pounds 30 pounds
Direct labor required per 100 boxes ($12.00 per hour) ................................................. .25 hour .50 hour
The following manufacturing-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. Manufacturing overhead is applied on the basis of direct-labor hours.
Indirect material ............................................................................................................................................ $ 10,500
Indirect labor ................................................................................................................................................ 50,000
Utilities ......................................................................................................................................................... 25,000
Property taxes ............................................................................................................................................... 18,000
Insurance ..................................................................................................................................................... 16,000
Depreciation ................................................................................................................................................. 29,000
Total ............................................................................................................................................................. $148,500
The following selling and administrative expenses are anticipated for the next year.
Salaries and fringe benefits of sales personnel ................................................................................................... $ 75,000
Advertising ...................................................................................................................................................... 15,000
Management salaries and fringe benefits .......................................................................................................... 90,000
Clerical wages and fringe benefits ..................................................................................................................... 26,000
Miscellaneous administrative expenses ............................................................................................................. 4,000
Total ................................................................................................................................................................ $210,000
The sales forecast for the next year is as follows:
Sales Volume Sales Price
Box type C ......................................................................................... 500,000 boxes $ 90.00 per hundred boxes
Box type P ......................................................................................... 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.
Expected Inventory Desired Ending Inventory
January 1 December 31
Finished goods:
Box type C ................................................................................ 10,000 boxes 5,000 boxes
Box type P ................................................................................ 20,000 boxes 15,000 boxes
Raw material:
Paperboard .............................................................................. 15,000 pounds 5,000 pounds
Corrugating medium ................................................................. 5,000 pounds 10,000 pounds
Required: Prepare a master budget for FreshPak Corporation for the next year. Assume an income tax rate of 40 percent. Include the following schedules.
1. Sales budget.
2. Production budget.
3. Direct-material budget.
4. Direct-labor budget.
5. Manufacturing-overhead budget.
6. Selling and administrative expense budget.
7. Budgeted income statement. ( Hint: To determine cost of goods sold, first compute the manufacturing cost per unit for each type of box. Include applied manufacturing overhead in the cost.)
Explanation / Answer
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Request to post balance part in seperate question. Chegg policy do not allow to answer more than 4 sub parts. However tried to answer maximum
a. Sales Budget Unit Sales Unit Selling Price Total Sale Box C 500000 90 45000000 Box P 500000 130 65000000 Total Revenue from Sale 110000000 b. Production Budget Box C Box P Expected units to be sold 500000 500000 Desired Inventory, ending 5000 15000 Total units Available 505000 515000 Estimated Inventory , beginning -10000 -20000 Total Units to be produced 495000 495000 Direct Material Purchase Budget-Paperboard Box C Box P Total Production Requirement 495000 495000 Raw Material Required Per Box (pounds) 0.3 0.7 Raw Material Required for Production (Pounds) 148500 346500 495000 Desired Inventory, Ending 5000 Total Raw Material Needs 500000 Estimated Inventory , Beginning -15000 Raw Material to be Purchased 485000 Unit Price 0.2 Cost of Purchase (Paperboard) 97000 Direct Material Purchase Budget-Corrugating Box C Box P Total Production Requirement 495000 495000 Raw Material Required Per Box (pounds) 0.2 0.3 Raw Material Required for Production (Pounds) 99000 148500 247500 Desired Inventory, Ending 10000 Total Raw Material Needs 257500 Estimated Inventory , Beginning -5000 Raw Material to be Purchased 252500 Unit Price 0.1 Cost of Purchase (Paperboard) 25250 e.Direct Labor Cost Budget Box C Box P Total Hours required for production: Production Requirement 495000 495000 990000 Direct Labor Requirement per box (Hours) 0.0025 0.005 0.0075 -Direct Labor Required production Hours 1237.5 2475 3712.5 Hourly rate 12 Total Direct Labor Cost 44550 5. Manufacturing Overhead Cost Budget Indirect Material 10500 Indirect Labor 50000 Utility 25000 Property Tax 18000 Insurance 16000 Depreciation 29000 Total 148500Related Questions
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