FreshPak Corporation manufactures two types of cardboard boxes used in shipping

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.

The following production-overhead costs are anticipated for the next year. The predetermined overhead rate is based on a production volume of 420,000 units for each type of box. Production overhead is applied on the basis of direct-labor hours.

Additional Data:

* Budgeted Manufacturing Overhead Cost = $170,100

* Tax Rate = 40%

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Prepare the budgeted income statement for the next year.

This is what I have so far but I can't seem to get the other numbers correct.

Type of Box Direct material required per 100 boxes: Paperboard ($0.38 per pound) Corrugating medium (S0.19 per pound) 30 pounds 20 pounds 70 pounds 30 pounds Direct labor required per 100 boxes ($16.00 per hour) 0.15 hour 0.30 hour

Explanation / Answer

Statement Showing Sales Budget Statement Showing Production Budget Box C Box P Total Box C Box P Sales ( in units) 425000 425000 850000 Sales 425000 425000 Sales ($/Unit) $1 $2 Desired Ending inventory 11000 21000 Sales Revenue $467,500 $722,500 1190000 Total Unit Needed 436000 446000 Less: Beg. Inventory -16000 -26000 Production required 420000 420000 Statement Showing Direct Labour Budget Box C Box P Total Manufacturing Overhead Budget Prod Req. 420000 420000 Indirect Material 12750 Direct Labour Cost 0.0015 0.003 Indirect Labour 51350 Direct Labour for Production 630 1260 1890 Utilities 31500 Direct Labour Rate $16 Property Tax 21000 Total Direct Labour Cost $30,240 Insurance 14000 Depreciation 39500 Statement Showing Raw material Budget- Paper Board Total Overhead 170100 Box C Box P Total Production Required (inUnit) 420000 420000 Selling & Administrative Expense Budget Raw Material/Box 0.3 0.7 Salries and Frienge Benefit of Sales personnel 121500 RM for Production 126000 294000 420000 Advertising 25500 Desired Ending inventory 8000 Management Salaries and Fringe Benefit 141000 Total Rawmaterial needed 428000 Clerical Wages and Fringe Benefit 42000 Beg. RM Inventory -18000 Misc. Administrative Expense 6600 RM to be purchased 410000 Total 336600 Price/Pound $0.38 Cost of Purchase $155,800.00 Statement Showing Raw material Budget- Corrugating Budgeted Income Statement Box C Box P Total Sales Revenue from Sales Budget $1,190,000.00 Production Required (Units)            420,000            420,000 Less: Cost of Goods Sold Raw Material/Box                   0.20                   0.30 BoxC(500000*$0.311) $155,500.00 RM for Production              84,000            126,000            210,000 BoxP(500000*0.641) $320,500.00 Desired Ending inventory                13,000 Gross Margin $714,000.00 Total Rawmaterial needed            223,000 Less: Selling & Admin Expense $336,600.00 Beg. RM Inventory              (8,000) Income Before Tax $377,400.00 RM to be purchased            215,000 Less: Income Tax Expense @40% $150,960.00 Price/Pound $0.19 Net Income $226,440.00 Cost of Purchase $40,850.00 W/Note: Computation of Manufacturing Cost/Unit Box C Box P Direct Material Cost: PaperBoard $0.11 $0.27 Corrugating $0.04 $0.06 Direct Labour $0.02 $0.05 Applied Manufacturing Overhead $0.14 $0.27 ($90*0.0015) ($90*0.003) Manufacturing Cost/Unit $0.31 $0.64 Predertmined Overhead Recovery Rate ($170100/1890Hour)=90

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