Required information FreshPak Corporation manufactures two types of cardboard bo

Question

Required information

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.

The following production-overhead costs are anticipated for the next year. The predetermined overhead rate is based on a production volume of 470,000 units for each type of box. Production overhead is applied on the basis of direct-labor hours.

The following selling and administrative expenses are anticipated for the next year.

The sales forecast for the next year is as follows:

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.

Prepare a master budget for FreshPak Corporation for the next year. Assume an income tax rate of 40 percent.

Question: Prepare the budgeted income statement for the next year. (Do not round intermediate calculations.)

Type of Box C P Direct material required per 100 boxes: Paperboard ($0.28 per pound) 25 pounds 65 pounds Corrugating medium ($0.14 per pound) 15 pounds 25 pounds Direct labor required per 100 boxes ($15.00 per hour) 0.40 hour 0.80 hour

Explanation / Answer

Cost of Goods Sold per Unit

Budgeted Income Statement for FreshhPak Corporation for the period ending 31st December, ----- Type of Box C P Qty Rate Amount Qty Rate Amount Total Amount Sales 475000 $ 145 Per Hundred Box 688750 475000 $ 205 Per Hundred Box 973750 1662500 Direct Cost 475000 $ 31.5 Per Hundred Box 149625 475000 $ 66.5 Per Hundred Box 315875 465500 Gross Profit 539125 657875 1197000 Less: Selling & Administrative Expense Salaries and fringe benefits of sales personnel 136500 Advertising 30500 Management salaries and fringe benefits 151000 Clerical wages and fringe benefits 47000 Miscellaneous administrative expenses 7600 372600 Net Profit 824400 Income tax @ 40% 329760 Net Income After Tax 494640

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