In: Accounting
V & T Faces, Inc. manufactures to types of makeup foundation. Type S is for sensitive skin and type N is for non-sensitive skin. The products have the following materials and labor requirements:
Type N | Type S | |
Direct materials required per 100 bottles | ||
Liquid medium | 30 pounds | 70 pounds |
Pigment A | 20 pounds | 30 pounds |
Direct labor required per 100 bottles ($12/hour) | .25 hour | .50 hour |
The following production-overhead costs are anticipated for the next year. The predetermined overhead rate is based on the production volume of 495,000 bottles. Production overhead is applied on the basis of direct-labor hours.
Indirect material | $10,500 |
Indirect labor | 49,000 |
Utilities | 25,000 |
Property taxes | 16,000 |
Insurance | 18,000 |
Depreciation | 30,000 |
Total | $148,500 |
The following selling and administrative expenses are anticipated for the next year:
Salaries and fringe benefits of sales personnel | $80,000 |
Advertising | 15,000 |
Management salaries and fringe benefits | 85,000 |
Clerical wages and fringe benefits | 25,000 |
Miscellaneous administrative expenses | 5,000 |
Total | $210,000 |
The sales forecast is as follows:
Sales Volume | Sales Price | |
Type N | 500,000 bottles | $90 per hundred bottles |
Type S | 500,000 bottles | $130 per hundred bottles |
The following inventory information is available. The unit production costs for each product are expected to be the same this year and the following year.
Expected Inventory January 1 | Desired Ending Inventory December 31 | |
Finished Goods | ||
Type N | 10,000 bottles | 5,000 bottles |
Type S | 20,000 bottles | 15,000 bottles |
Raw Material | ||
Pigment A | 15,000 pounds | 5,000 pounds |
Liquid medium | 5,000 pounds | 10,000 pounds |
Required:
Prepare a master budget for V & T Faces, Inc., for the next year. Assume an income tax rate of 40 percent. Include the following:
Note- Please provide the cost per pound of Liquid medium and Pigment A direct materials in order complete the Budgeted Income Statement.