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Master budget

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Edgeworth Box 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.
Direct Material Required per 100 boxes C Box P Box
Corrugating medium ($.15 per lb) 20 lbs 30 lbs
Paperboard ($.30 per lb) 30 lbs 70lbs
Direct Labor required per 100 boxes ($18.00 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 $15,750
Indirect Labor $75,000
Utilities $37,500
Property Taxes $27,000
Insurance $24,000
Depreciation $43,500
Total $222,750

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

Salaries and fringe benefits of sales personnel $112,500
Advertising $22,500
Management Salaries and fringe benefits $135,000
Clerical wages and fringe benefits $39,000
Misc. administrative expenses $6,000
Total $315,000

The Sales forecast for the next year is as follows:

Sales Volume Sales Price
Box type C 500,000 boxes $135 per hundred boxes
Box type P 500,000 boxes 195 per hundred boxes

The following inventory information is available for next year.

Expected Jan 1 Desired ending Inventory Dec 31
Finished Goods
Box Type C 10,000 boxes 5,000 boxes
Box Type P 20,000 Boxes 15,000 boxes

Raw Materials
Corrugating medium 5,000 lbs 10,000 lbs
paperboard 15,000 lbs 5,000 lbs

Prepare a master budget for Edgeworth Box Corporation for the next year. Assume an income tax rate of 35%. 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. Carry these calculations to three decimal places)

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