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 B 60 Anticipated volume in units Unit selling price 404,400 201,000 Production budget: Desired ending finished goods units Beginning finished goods units 28,800 17,600 34,100 13,100 Direct materials budget Direct materials per unit (pounds) Desired ending direct materials pounds Beginning direct materials pounds Cost per pound 4,600 16,400 41,100 13,000 Direct labor budget: 0.6 Direct labor time per unit Direct labor rate per hour 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 seling expenses of $662,000 for product J8 50 and $365,000 for product 38 60, and administrative expenses of $545,000 for product 18 50 and $345,000 for product 38 60. Interest expense is $150,000 (not allocated to products). Income taxes MacBook Air FS

Explanation / Answer

Income from Operation:

JB 50 = Gross profit - operating expenses

= 3,639,600 - 662,000 - 545,000 - 1,207,000

= $1,225,600

JB 60 = Gross profit - operating expenses

= 1,005,000 - 365,000 - 345,000 - 710,000

= $- 415,000

Total = 1,225,600 + (- 415,000)

= $810,600

Income before income tax = Income from operation - interest expense

= 810,600 - 150,000

= $660,600

Income tax = 30% of Income before income tax

= 30% * 660,600

= $198,180

Net income / loss = Income before income tax - income tax

= 660,600 - 198,180

= $462,420

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