70.2K

Verified Solution

Link Copied!

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.

	Type of Box
	C		P
Direct material required per 100 boxes:
Corrugating medium ($0.14 per pound)	35	pounds	45	pounds
Paperboard ($0.28 per pound)	45	pounds	85	pounds
Direct labor required per 100 boxes ($16.00 per hour)	0.35	hour	0.70	hour

The unit production costs for each product are expected to be the same this year and next year.

The following production-overhead costs are anticipated for the next year. The predetermined overhead rate is based on a production volume of 490,000 units for each type of box. Production overhead is applied on the basis of direct-labor hours.

Indirect material	$	14,850
Indirect labor		76,690
Utilities		52,500
Property taxes		35,000
Insurance		28,000
Depreciation		60,500
Total	$	267,540

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

Salaries and fringe benefits of sales personnel	$	142,500
Advertising		32,500
Management salaries and fringe benefits		155,000
Clerical wages and fringe benefits		49,000
Miscellaneous administrative expenses		8,000
Total	$	387,000

The sales forecast for the next year is as follows:

	Sales Volume		Sales Price
Box type C	495,000	boxes	$	135	per hundred boxes
Box type P	495,000	boxes		195	per hundred boxes

The following inventory information is available for the next year.

	Expected Inventory January 1		Desired Ending Inventory December 31
Finished goods:
Box type C	19,500	boxes	14,500	boxes
Box type P	29,500	boxes	24,500	boxes
Raw material:
Corrugating medium	9,000	pounds	14,000	pounds
Paperboard	18,000	pounds	8,000	pounds

Prepare a master budget for Edgeworth Box Corporation for the next year. Assume an income tax rate of 40 percent. Include the following schedules. Calculate a, b, c, and d. Assume an income tax rate of 40 percent. Sales Revenue $1,633,500 Less: Cost of Goods Sold a Gross Margin b Selling and administrative expenses 387,000 Income before taxes c Income Tax expense d e

Answer & Explanation Solved by verified expert

See Answer