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Business, 26.03.2020 19:02 lrich20200

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) 45 pounds 85 pounds
Corrugating medium ($0.20 per pound) 35 pounds 45 pounds
Direct labor required per 100 boxes-
($20.00 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 460,000 units for each type of box. Production overhead is applied on the basis of direct labor hours.

Indirect material $13,950
Indirect labor 88,450
Utilities 43,500
Property taxes 29,000
Insurance 22,000
Depreciation 51,500
Total $248,400

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

Salaries and fringe benefits of sales personnel $133,500
Advertising 29,500
Management salaries and fringe benefits 149,000
Clerical wages and fringe benefits 46,000
Miscellaneous administrative expenses 7,400
Total $365,400

The sales forecast for the next year is as follows:

Sales Volume Sales Price
Box type C 465,000 boxes $135.00 per hundred boxes
Box type P 465,000 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 13,500 boxes 8,500 boxes
Box type P 23,500 boxes 18,500 boxes
Raw material:
Paperboard 15,000 pounds 5,000 pounds
Corrugating medium 6,000 pounds 11,000 pounds

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

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