Question

Deleon Inc. is preparing its annual budgets for the year ending December 31, 2020. Accounting assistants furnish the data shown below. Product Product JB 50 JB 60 403,200 203,300 $23 $28 28,000 33,500 17,000 12,100 Sales budget: Anticipated volume in units Unit selling price Production budget: Desired ending finished goods units Beginning finished goods units Direct materials budget: Direct materials per unit (pounds) Desired ending direct materials pounds Beginning direct materials pounds Cost per pound Direct labor budget: Direct labor time per unit Direct labor rate per hour Budgeted income statement: Total unit cost 33,100 44,900 $3 2 16,400 14,900 $4 0.3 $11 0.6 $11 $14 $22 An accounting assistant has prepared the detailed manufacturing overhead budget and the selling and administrative expense budget. The latter shows selling expenses of $665,000 for product JB 50 and $362,000 for product JB 60, and administrative expenses of $545,000 for product JB 50 and $344,000 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

Answer 1

Solution:

Sales Budget - Deleon Inc.
Particulars	JB50	JB60	Total
Expected unit sales	403200	203300
Selling price per unit	$23.00	$28.00
Projected Sales Revenue	$9,273,600.00	$5,692,400.00	$14,966,000.00

Production Budget - Deleon Inc.
Particulars	JB50	JB60
Expected unit sales	403200	203300
Add: Desired ending inventory	28000	17000
Total required units	431200	220300
Less: Beginning Inventory	33500	12100
Budgeted production units	397700	208200

Material Purchase Budget - Deleon Inc.
Particulars	JB50	JB60	Total
Budgeted production units	397700	208200
Material required per unit (In pound)	1	2
Total material requirement	397700	416400
Add: Desired units of material in ending inventory	33100	16400
Total material required	430800	432800
Less: units of material in beginning inventory	44900	14900
Budgeted purchase of raw material (In pound)	385900	417900
Cost per pound	$3.00	$4.00
Budgeted purchase of raw material	$1,157,700.00	$1,671,600.00	$2,829,300.00

Direct labor Budget - Deleon Inc.
Particulars	JB50	JB60	Total
Budgeted production units	397700	208200
Direct labor hour per unit	0.3	0.6
Total direct labor hours	119310	124920
Direct labor rate per hour	$11.00	$11.00
Budgeted Direct labor cost	$1,312,410.00	$1,374,120.00	$2,686,530.00

Budgeted Income Statement - Deleon Inc. For the year ended Dec 31, 2020
Particulars	JB50	JB60	Total
Sales Revenue	$9,273,600.00	$5,692,400.00	$14,966,000.00
Cost of goods sold JB 50 - 403200*$14 JB 60 - 203300*$22	$5,644,800.00	$4,472,600.00	$10,117,400.00
Gross Profit	$3,628,800.00	$1,219,800.00	$4,848,600.00
Operating Expenses:
Selling Expenses	$665,000.00	$362,000.00	$1,027,000.00
Administrative expenses	$545,000.00	$344,000.00	$889,000.00
Total Operating expenses	$1,210,000.00	$706,000.00	$1,916,000.00
Operating Income	$2,418,800.00	$513,800.00	$2,932,600.00
Interest expense			$150,000.00
Income before taxes			$2,782,600.00
Income tax expense (30%)			$834,780.00
Net Income			$1,947,820.00