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Preparation of master budget

FC manufactures two types of cardboard boxes used in shipping canned food, fruit and vegatables. The canned food box - type C and the perishable box - type P have the following material and labor requirements:
Box C Box P
Direct material required per 100 boxes:
paperboard ($20 per pound)....................30 lb............................70lb
Corrugating medium ($0.10 per lb)............20lb..............................30lb
Direct labor required per 100 boxes
($12.00 per hour)......................................0.25 hours...................0.50 hours
The preditermined 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
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Total........................................................148,000

The following selling and admin expenses are anticipated for the next year.
Salaries and benefits.....................................75,000
Advertising.......................................................15,000
Management salaries........................................90,000
Clerical wages and benefits............................26,000
Misc. admin expenses...................................4,000
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Total.................................................................210,000

The sales forecast for the next year is:
Sales Volume Sales price
Box type C...........................................500,000 boxes................90.00 per 00 box
Box type P..................................5000,000 boxes.................130.00 per 00 box

The following inventory info is available for the next year:

Expected inventory Desired ending inventory
Jan 1 Dec 31
Finished goods:
Box type C..............................10,000 boxes...............................5,000 bpxes
Box type P................................20,000 boxes..............................15,000 boxes
Raw material:
Paperboard.............................15,000 lb.........................................5,000 lb
Corrugating medium...................5,000 lb.........................................10,000 lb

Prepare a master budget for PC for the next year. Assume an income tax rate of 40%. 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 admin expense budget
7.Budgeted income statement(compute the manufacturing cost per unit for each type of box and include applied manufacturing overhead in the cost)

Solution Summary

A preparation of master budgets are determined. The selling and admin expenses are determined.

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