Deleon Inc. is preparing its annual budgets for the year ending December 31, 201

Question

Deleon Inc. is preparing its annual budgets for the year ending December 31, 2017. Accounting assistants furnish the data shown below. Product JB 50 Product JB 60 Sales budget: Anticipated volume in units 402,500 201, 200 Unit selling price $22 $27 Production budget: Desired ending finished goods units 27,700 19,300 Beginning finished goods units 31,800 11,100 Direct materials budget: Direct materials per unit (pounds) 1 3 Desired ending direct materials pounds 34,700 18,800 Beginning direct materials pounds 44,900 14,700 Cost per pound $3 $3 Direct labor budget: Direct labor time per unit 0.3 0.6 Direct labor rate per hour $12 $12 Budgeted income statement: Total unit cost $13 $22 An accounting assistant has prepared the detailed manufacturing overhead budget and the selling and administrative expense budget. The latter shows selling expenses of $662,000 for product JB 50 and $363.000 for product JB 60, and administrative expenses of $544,000 for product JB 50 and $343,000 for product JB 60. Interest expense is $150.000 (not allocated to products). Income taxes are expected to be 30%. Prepare the budegeted multiple-step income statement for the year.

Explanation / Answer

Particulars JB50 JB60 Total Sales(units)          402,500              201,200 Selling price                  22 27 Sales ($)       8,855,000       5,432,400          14,287,400 Less: Cost of raw material(WN#1) 1,195,200 1,884,600            3,079,800 Direct labour       1,434,240       1,507,680            2,941,920 Selling expenses          662,000 363,000            1,025,000 Admin Exppenses          544,000 343,000 887,000 PBIT       5,019,560       1,334,120 6,353,680 Interest          150,000 PBT       6,203,680 Tax@30%            1,861,104 PAT($)       4,342,576 WN#1 Production(units) JB50 JB60 Sales          402,500          201,200 Closing inventory           27,700           19,300 less:Opening inventory           31,800                11,100 Production          398,400          209,400 Raw material required per unit                    1                    3 Raw material required          398,400          628,200 Material Price                    3                    3 Cost of raw material       1,195,200       1,884,600 WN#2 Direct labour hours JB50 JB60 Production(units)          398,400          209,400 Direct labour hour per unit                    0                    1 Direct labour hours          119,520          125,640 Labour cost per hour                  12                  12 Direct labour cost       1,434,240       1,507,680

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