Check m FreshPak Corporation manufactures two types of cardboard boxes used in s
ID: 2553798 • Letter: C
Question
Check m 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 Direct material required per 100 boxes: Paperboard ($0.36 per pound) Corrugating medium (s0.18 per pound 40 pounds 30 pounds 80 pounds 40 pounds 0.30 hour 0.60 hour Direct labor required per 100 boxes ($18.00 per hour) The following production-overhead costs are anticipated for the next year. The predetermined overhead rate is based on a production volume of 485,000 units for each type of box. Production overhead is applied on the basis of direct- labor hours. Indirect material Indirect labor Utilities Property taxes Insurance Depreciation Total 14, 700 76,200 51,000 34,000 27,000 $261,900 The following selling and administrative expenses are anticipated for the next year Prev1 2 37of 7 Next> 3.048 26Explanation / Answer
1 Sales Budget Box C Box P Sales in units 490000 490000 Sales price per unit (Price given is per hunderd box) 1.3 1.9 Sales Revenue (Sales Unit* Price) 637000 931000 2 Production Budget Box C Box P Sales (From Sales Budget) 490000 490000 Add: Ending desired inventory 13500 23500 Total units needed 503500 513500 Less: Beginning inventory 18500 28500 Production Requirment 485000 485000 3 Direct Material Budget-Paperboard Box C Box P Total Production Requirement (From Production Budget) 485000 485000 Raw Material required per box (pounds) 0.4 0.8 Raw Material required for production (pounds) 194000 388000 582000 Add: Desired Ending raw material inventory 7500 Total Raw material needs 589500 Less: Beginning Raw Material 17500 Raw Material to be purchased 572000 Price (Per Pound) 0.36 Cost of purchase (paperboard) 205920 Direct Material Budget-Corrugating Box C Box P Total Production Requirement (From Production Budget) 485000 485000 Raw Material required per box (pounds) 0.3 0.4 Raw Material required for production (pounds) 145500 194000 339500 Add: Desired Ending raw material inventory 13500 Total Raw material needs 353000 Less: Beginning Raw Material 8500 Raw Material to be purchased 344500 Price (Per Pound) 0.18 Cost of purchase (corrugating) 62010 4 Direct Labor Budget Box C Box P Total Production Requirement (From Production Budget) 485000 485000 Direct Labor hour required per box (hours) 0.003 0.006 Direct Labor hour required for production (hours) 1455 2910 4365 Direct Labor Rate 18 Total Direct Labor Cost 78570 7 Budgeted income statement Sales Revenue (637000+931000) 1568000 Less: Cost of goods sold (working below) 614700 Gross Margin 953300 Selling and Administrative Expense 383400 Income before taxes 569900 Income Taxes 35% 199465 Net Income 370435 Cost of Goods Sold Box C Box P Total PaperBoard: Units Sold 490000 490000 Raw Material required per box (pounds) 0.4 0.8 Raw Material required for production (pounds) 196000 392000 588000 Price (Per Pound) 0.36 Cost of purchase (paperboard) 211680 211680 Corrugating: Units Sold 490000 490000 Raw Material required per box (pounds) 0.3 0.4 Raw Material required for production (pounds) 147000 196000 343000 Price (Per Pound) 0.18 Cost of purchase (paperboard) 61740 61740 Direct Labor: Production Requirement (From Production Budget) 490000 490000 Direct Labor hour required per box (hours) 0.003 0.006 Direct Labor hour required for production (hours) 1470 2940 4410 Direct Labor Rate 18 Total Direct Labor Cost 79380 79380 Fixed Overhead 261900 COGS 614700