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.

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 JB 60 Product JВ 50 Sales budget: Anticipated volume in units 403,200 205,000 Unit selling price $22 $27 Production budget: Desired ending finished goods units 26,300 16,000 Beginning finished goods units 31,200 13,300 Direct materials budget: Direct materials per unit (pounds) 2 17,900 Desired ending direct materials pounds 33,300 Beginning direct materials pounds 13,100 43,500 Cost per pound $2 $3 Direct labor budget: Direct labor time per unit 0.4 0.6 Direct labor rate per hour $12 $12 Budgeted income statement: Total unit cost $12 $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 $362,000 for product JB 60, and administrative expenses of $542,000 for product JB 50 and $345,000 for product JB 60. Interest expense is $150,000 (not allocated to products). Income taxes are expected to be 30%. Prepare the sales budget for the year. DELEON INC Sales Budget JB 50 JB 60 Total Expected unit sales

Answer 1

1) Sales Budget of DELEON INC.

Particulars	JB 50	JB 60	Total
Expected Unit Sales (a)	403200	205000
Unit Selling Price (b)	$ 22	$ 27
Total Sales for the year (c = a*b)	8870400	5535000	14405400

2) Production Budget of DELEON INC.

Particulars	JB 50	JB 60	Total
Expected Unit Sales (a)	403200	205000
Add: Desired Ending Inventory (b)	26300	16000
Less: Opening Inventory (c)	31200	13300
Production Budget for the month (d = a+b-c)	398300	207700

3) Direct Material Budget

Particulars	JB 50	JB 60	Total
Production Budget for the month (a)	398300	207700
Material p.u. (pound) (b)	2	2
Total Material required for production (c=a*b)	796600	415400
Add: Closing Inventory required in stock (d)	33300	17900
(Less) : Opening Inventory in stock (e)	(43500)	(13100)
Material Purchase Budget (pounds) (f = c+d-e)	786400	420200
Material cost per pound (g)	$2	$3
Material cost budget for the month (h = f*g)	1572800	1260600

4) Labour Budget:

Particulars	JB 50	JB 60	Total
Production budget for the month (a)	398300	207700
Direct Labor time per unit	0.4	0.6
Total labor hours required	159320	124620
Labor rate per hour	$ 12	$ 12
Total Labor cost	1911840	1495440

5) Multistep Income statement

Particulars	JB 50	JB 60	Total
Sales	8870400	5535000	14405400
Direct Material Cost	1572800	1260600	2833400
Direct Labor Cost	1911840	1495440	3407280
Selling Expenses	662000	362000	1024000
Administrative Expenses	542000	345000	887000
Interest Expenses			150000
Net Income			6103720
Income Taxes @ 30%			1831116
Net Income after taxes			4272604.