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    Preparation of master budget

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    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
    --------------------------------------------------------------------
    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
    --------------------------------------------------------------------------
    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)

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    https://brainmass.com/business/budgets/preparation-master-budget-457762

    Solution Summary

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

    $2.19

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