Question

Required information Problem 9-42 Preparation of Master Budget (LO 9-3, 9-4, 9-5) [The following information applies to the questions displayed below.] 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 ($0.40 per pound) 35 pounds 75 pounds Corrugating medium ($0.20 per pound) 25 pounds 35 pounds Direct labor required per 100 boxes ($20.00 per hour) 0.20 hour 0.40 hour The following production-overhead costs are anticipated for the next year. The predetermined overhead rate is based on a production volume of 425,000 units for each type of box. Production overhead is applied on the basis of direct-labor hours. Indirect material $ 12,900 Indirect labor 54,600 Utilities 33,000 Property taxes 22,000 Insurance 15,000 Depreciation 41,000 Total $ 178,500 The following selling and administrative expenses are anticipated for the next year. Salaries and fringe benefits of sales personnel $ 123,000 Advertising 26,000 Management salaries and fringe benefits 142,000 Clerical wages and fringe benefits 42,500 Miscellaneous administrative expenses 6,700 Total $ 340,200 The sales forecast for the next year is as follows: Sales Volume Sales Price Box type C 430,000 boxes $ 115.00 per hundred boxes Box type P 430,000 boxes 175.00 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 17,000 boxes 12,000 boxes Box type P 27,000 boxes 22,000 boxes Raw material: Paperboard 18,500 pounds 8,500 pounds Corrugating medium 8,500 pounds 13,500 pounds Prepare a master budget for FreshPak Corporation for the next year. Assume an income tax rate of 30 percent. Problem 9-42 Part 3 3-a. Prepare the direct-material budget for paperboard. 3-b. Prepare the direct-material budget for corrugating medium.

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• Req 3A
• Req 3B

Prepare the direct-material budget for paperboard.

Paperboard Box C Box P Total Production requirement (number of boxes) 425,000 425,000 Raw material required per box (pounds) 0.35 0.75 Raw material required for production (pounds) 148,750 318,750 467,500 Add: Desired ending raw-material inventory 8,500 Total raw-material needs 476,000 Less: Beginning raw-material inventory Raw material to be purchased Price (per pound) $0.40 Cost of purchases (paperboard)

Prepare the direct-material budget for corrugating medium.

	Corrugating Medium Box C Box P Total Production requirements (number of boxes) Raw material required per box (pounds) 0.25 0.35 Raw material required for production (pounds) 13,500 Total raw-material needs Raw material to be purchased Price (per pound) $0.20 Cost of purchases (corrugating medium)

Prepare a master budget for FreshPak Corporation for the next year. Assume an income tax rate of 30 percent.

Problem 9-42 Part 4

4. Prepare the direct-labor budget for the next year. (Do not round intermediate calculations. Round "Direct labor required per box (hours)" to 4 decimal places.)

	Box C Box P Total Production requirements (number of boxes) Direct labor required per box (hours) Direct labor required for production (hours) Direct-labor rate Total direct-labor cost

5. Prepare the production-overhead budget for the next year.

	Total production overhead

6. Prepare the selling and administrative expense budget for the next year.

	Total selling and administrative expenses

7. Prepare the budgeted income statement for the next year. (Do not round intermediate calculations.)

Answer 1