Problem 21-2A Deleon Inc. is preparing its annual budgets for the year ending De

Question

Problem 21-2A Deleon Inc. is preparing its annual budgets for the year ending December 31, 2017. Accounting assistants furnish the data shown below Product B 50 Product JB 60 Sales budget 402,800 203,900 $28 Anticipated volume in units Unit selling price $23 Production budget Desired ending finished goods units Beginning finished goods units 27,800 34,900 19,000 13,600 Direct materials budget: Direct materials per unit (pounds) Desired ending direct materials pounds Beginning direct materials pounds Cost per pound 2 32,100 43,000 $3 18,500 14,600 $3 Direct labor budget: Direct labor time per unit Direct labor rate per hour Budgeted income statement 0.6 $12 $12 Total unit cost $14 $21 An accounting assistant has prepared the detailed manufacturing overhead budget and the selling and administrative expense budget. The latter shows selling expenses of $661,000 for product JB 50 and $365,000 for product JB 60, and administrative expenses of $543,000 for product JB 50 and $342,000 for product JB 60 Interest expense is $150,000 (not allocated to products). Income taxes are expected to be 30%

Explanation / Answer

Solution :

DELEON INC. Budgeted Income Statement For the year ending December 31, 2017 JB 50 JB 60 Total Sales $9,264,400.00 $5,709,200.00 $14,973,600.00 Cost of goods sold (Units sales*total unit cost) $5,639,200.00 $4,281,900.00 $9,921,100.00 Gross Profit $3,625,200.00 $1,427,300.00 $5,052,500.00 Operating Expenses: Selling Expenses $661,000.00 $365,000.00 $1,026,000.00 Administrative expenses $543,000.00 $342,000.00 $885,000.00 Total Operating expenses $1,204,000.00 $707,000.00 $1,911,000.00 Income from Operations $2,421,200.00 $720,300.00 $3,141,500.00 Interest Expenses $150,000.00 Income Before Income Taxes $2,991,500.00 Income Tax Expense ($2,991,500*30%) $897,450.00 Net Income / (Loss) $2,094,050.00

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