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 403,200 204,100 Unit selling price $23 $27 Production budget: Desired ending finished goods units 29,300 17,800 Beginning finished goods units 34,400 11,900 Direct materials budget: Direct materials per unit (pounds) 2 3 Desired ending direct materials pounds 32,300 17,300 Beginning direct materials pounds 41,300 14,300 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 $12 $21 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 $361,000 for product JB 60, and administrative expenses of $541,000 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.

Prepare the production budget for the year.

Prepare the direct materials budget for the year.

Prepare the direct labor budget for the year. (Round Direct labor time per unit answers to 1 decimal place, e.g. 52.7.)

Prepare the budgeted multiple-step income statement for the year. (Note: income taxes are not allocated to the products).

Answer 1

Solution 1:

Sales Budget - Deleon Inc.
Particulars	JB50	JB60	Total
Expected unit sales	403200	204100
Selling price per unit	$23.00	$27.00
Projected Sales Revenue	$9,273,600.00	$5,510,700.00	$14,784,300.00

Solution 2:

Production Budget - Deleon Inc.
Particulars	JB50	JB60
Expected unit sales	403200	204100
Add: Desired ending inventory	29300	17800
Total required units	432500	221900
Less: Beginning Inventory	34400	11900
Budgeted production units	398100	210000

Solution 3:

Material Purchase Budget - Deleon Inc.
Particulars	JB50	JB60	Total
Budgeted production units	398100	210000
Material required per unit (In pound)	2	3
Total material requirement	796200	630000
Add: Desired units of material in ending inventory	32300	17300
Total material required	828500	647300
Less: units of material in beginning inventory	41300	14300
Budgeted purchase of raw material (In pound)	787200	633000
Cost per pound	$3.00	$3.00
Budgeted purchase of raw material	$2,361,600.00	$1,899,000.00	$4,260,600.00

solution 4:

Direct labor Budget - Deleon Inc.
Particulars	JB50	JB60	Total
Budgeted production units	398100	210000
Direct labor hour per unit	0.3	0.6
Total direct labor hours	119430	126000
Direct labor rate per hour	$12.00	$12.00
Budgeted Direct labor cost	$1,433,160.00	$1,512,000.00	$2,945,160.00

Solution 5:

Budgeted Income Statement - Deleon Inc. For the year ended Dec 31, 2020
Particulars	JB50	JB60	Total
Sales Revenue	$9,273,600.00	$5,510,700.00	$14,784,300.00
Cost of goods sold JB 50 - 403200*$12 JB 60 - 204100*$21	$4,838,400.00	$4,286,100.00	$9,124,500.00
Gross Profit	$4,435,200.00	$1,224,600.00	$5,659,800.00
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
Operating Income	$3,231,200.00	$517,600.00	$3,748,800.00
Interest expense			$150,000.00
Income before taxes			$3,598,800.00
Income tax expense (30%)			$1,079,640.00
Net Income			$2,519,160.00