Question

Problem 22-02A (Part Level Submission) Deleon Inc. is preparing its annual budgets for the year ending December 31, 2020. Accounting assistants furnish the ssignment page below. Product JB 50 Product JB 60 400,000 200,000 $25 $20 30,000 25,000 15,000 10,000 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 30,000 40,000 10,000 15,000 $4 $3 0.6 0.4 $12 $12 $13 $20 An accounting assistant has prepared the detailed manufacturing overhead budget and the selling and administrative expense budget. The latter shows selling expenses of $560,000 for product JB 50 and $360,000 for product JB 60, and administrative expenses of $540,000 for product JB 50 and $340,000 for product JB 60. Interest expense is $150,000 (not allocated to products). Income taxes are expected to be 30%.

Answer 1

DELON INC.
Budgeted Income Statement
For the Year Ending December 31,2020
	JB 50	JB 60	Total
Sales	$8,000,000	$5,000,000	$13,000,000
Cost of Goods Sold	$5,200,000	$4,000,000	$9,200,000
Gross Profit	$2,800,000	$1,000,000	$3,800,000
Operating Expense
Administrative Expenses	$540,000	$340,000	$880,000
Selling Expenses	$560,000	$360,000	$920,000
Total Operating Expenses	$1,100,000	$700,000	$1,800,000
Income from Operations	$1,700,000	$300,000	$2,000,000
Interest Expense			$150,000
Income before Income Taxes			$1,850,000
Income Tax Expense			$555,000
Net Income / ( Loss )			$1,295,000

Income Tax Expense = Income before Income Taxes * 30% = $1,850,000 * 30% = $555,000.