Freshpak corporation | Accounting homework help

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 January 1                     Desired Ending Inventory 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.)

 

HINTS:

1. Total sales revenue:

$1,100,000

3. Cost of purchases (paperboard):

$97,000

5. Total overhead: $148,500

7. Predetermined overhead

rate: $40 per hour

 

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