Question - 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.
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Type of Box
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C
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P
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Direct Materials required per 100 boxes:
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|
|
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Corrugating medium ($.15 per pound)
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20 Pounds
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30 pounds
|
|
Paperboard ($.30 per pound)
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30 punds
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70 pounds
|
|
Direct labor required per 100 boxes ($18 per hour)
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.25 hour
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.50 hour
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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.
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Indirect Material
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$15,750.00
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Indirect Labor
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$75,000.00
|
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Utilities
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$37,500.00
|
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Property Taxes
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$27,000.00
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|
Insurance
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$24,000.00
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Depreciation
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$43,500.00
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|
Total =
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$222,750.00
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The following selling and administrative expenses are anticipated for the next year.
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Salaries and fringe benefits of sales personnel
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$112,500.00
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Advertising
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$22,500.00
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|
Management salaries and fringe benefits
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$135,000.00
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Clerical wages and fringe benefits
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$39,000.00
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Miscellaneous administrative expenses
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$6,000.00
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Total =
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$315,000.00
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The sales forecast for the next year is as follows:
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Sales Volume
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Sales Price
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Box type C
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500,000 boxes
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$135 per 100 boxes
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|
Box type P
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500,000 boxes
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$195 per 100 boxes
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The following inventory information is available for the next year.
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Expected Inventory January 1st
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Desired Ending Inventory Dec. 31st
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Finished Goods:
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|
|
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Box type C
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10,000 boxes
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5,000 boxes
|
|
Box type P
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20,000 boxes
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15,000 boxes
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|
Raw material:
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|
|
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Corrugating medium
|
5,000 pounds
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10,000 pounds
|
|
Paperboard
|
15,000 pounds
|
5,000 pounds
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Required: Prepare a master budget for Edgeworth Box Corporation for the next year. Assume an income tax rate of 35 percent. 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.).