Check m FreshPak Corporation manufactures two types of cardboard boxes used in s
ID: 2554296 • 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 Direct labor required per 100 boxes ($18.00 per hour) 0.30 hour 0.60 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 59,000 $261,900 The following selling and administrative expenses are anticipated for the next year Next >Explanation / Answer
Solution: Budgeted income statement:
Particulars Amount ($) Sales revenue 1,568,000 Less: Cost of goods sold 617,400 Gross margin 950,600 Less: Selling and administrative expense 383,400 Income before taxes 567,200 Less: Income tax expense (567200*35%) 198,520 Net income 368,680