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FreshPak Corporation manufactures two types of cardboard boxes used in shipping canned food, fruit, and vegetables....

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
C P
Direct material required per 100 boxes:
Paperboard ($0.34 per pound) 50 pounds 90 pounds
Corrugating medium ($0.17 per pound) 40 pounds 50 pounds
Direct labor required per 100 boxes ($14.00 per hour) 0.35 hour 0.70 hour

The following production-overhead costs are anticipated for the next year. The predetermined overhead rate is based on a production volume of 410,000 units for each type of box. Production overhead is applied on the basis of direct-labor hours.

Indirect material $ 12,450
Indirect labor 82,190
Utilities 34,500
Property taxes 23,000
Insurance 18,000
Depreciation 36,500
Total $ 206,640

The following selling and administrative expenses are anticipated for the next year.

Salaries and fringe benefits of sales personnel $ 118,500
Advertising 24,500
Management salaries and fringe benefits 139,000
Clerical wages and fringe benefits 41,000
Miscellaneous administrative expenses 6,400
Total $ 329,400

The sales forecast for the next year is as follows:

Sales Volume Sales Price
Box type C 415,000 boxes $ 135.00 per hundred boxes
Box type P 415,000 boxes 195.00 per hundred boxes

The following inventory information is available for the next year. The unit production costs for each product are expected to be the same this year and next year.

Expected Inventory January 1 Desired Ending Inventory December 31
Finished goods:
Box type C 14,000 boxes 9,000 boxes
Box type P 24,000 boxes 19,000 boxes
Raw material:
Paperboard 17,000 pounds 7,000 pounds
Corrugating medium 7,000 pounds 12,000 pounds

Prepare a master budget for FreshPak Corporation for the next year. Assume an income tax rate of 40 percent.

  1. Prepare the production budget for the next year.

  2. -a. Prepare the direct-material budget for paperboard.

  3. 3-b. Prepare the direct-material budget for corrugating medium.

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ekkarill92 answered 2 years ago
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