Question

Problem 21-2A (Part Level Submission)

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		403,400		201,800
Unit selling price		$22		$27
Production budget:
Desired ending finished goods units		27,500		17,200
Beginning finished goods units		32,800		13,800
Direct materials budget:
Direct materials per unit (pounds)		2		3
Desired ending direct materials pounds		31,100		17,800
Beginning direct materials pounds		42,600		12,000
Cost per pound		$2		$3
Direct labor budget:
Direct labor time per unit		0.3		0.6
Direct labor rate per hour		$10		$10
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 selling expenses of $662,000 for product JB 50 and $361,000 for product JB 60, and administrative expenses of $541,000 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%.

A)

Prepare the sales budget for the year. DELFON INC. Sales Budget JB 50 Total Expected unit sales Unit selling price Total sales Click if you would like to Show Work for this question: Open Show Work

B)

C)

D)

E)

Answer 1

Solution a:

Sales Budget - Deleon Inc.
Particulars	JB50	JB60	Total
Expected unit sales	403400	201800
Selling price per unit	$22.00	$27.00
Projected Sales Revenue	$8,874,800.00	$5,448,600.00	$14,323,400.00

Solution b:

Production Budget - Deleon Inc.
Particulars	JB50	JB60
Expected unit sales	403400	201800
Add: Desired ending inventory	27500	17200
Total required units	430900	219000
Less: Beginning Inventory	32800	13800
Budgeted production units	398100	205200

Solution c:

Material Purchase Budget - Deleon Inc.
Particulars	JB50	JB60	Total
Budgeted production units	398100	205200
Material required per unit (In pound)	2	3
Total material requirement	796200	615600
Add: Desired units of material in ending inventory	31100	17800
Total material required	827300	633400
Less: units of material in beginning inventory	42600	12000
Budgeted purchase of raw material (In pound)	784700	621400
Cost per pound	$2.00	$3.00
Budgeted purchase of raw material	$1,569,400.00	$1,864,200.00	$3,433,600.00

Solution D:

Direct labor Budget - Deleon Inc.
Particulars	JB50	JB60	Total
Budgeted production units	398100	205200
Direct labor hour per unit	0.3	0.6
Total direct labor hours	119430	123120
Direct labor rate per hour	$10.00	$10.00
Budgeted Direct labor cost	$1,194,300.00	$1,231,200.00	$2,425,500.00

Solution E:

Budgeted Income Statement - Deleon Inc. For the year ended Dec 31, 2020
Particulars	JB50	JB60	Total
Sales Revenue	$8,874,800.00	$5,448,600.00	$14,323,400.00
Cost of goods sold JB 50 - 403400*$13 JB 60 - 201800*$22	$5,244,200.00	$4,439,600.00	$9,683,800.00
Gross Profit	$3,630,600.00	$1,009,000.00	$4,639,600.00
Operating Expenses:
Selling Expenses	$662,000.00	$361,000.00	$1,023,000.00
Administrative expenses	$541,000.00	$345,000.00	$886,000.00
Total Operating expenses	$1,203,000.00	$706,000.00	$1,909,000.00
Operating Income	$2,427,600.00	$303,000.00	$2,730,600.00
Interest expense			$150,000.00
Income before taxes			$2,580,600.00
Income tax expense (30%)			$774,180.00
Net Income			$1,806,420.00