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. Product JB 50 Product JB 60 402,300 $23 203,700 $27 28,100 34,100 18,100 12,500 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 34,000 44,600 18,500 13,400 $3 0.6 . 512 $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 $661,000 for product JB 50 and $361,000 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%.

Answer 1

Budgeted Income Statement
For the Year Ending December 31, 2017
	JB 50	JB 60	Total
Sales	9252900	5499900	14752800
Cost of Goods Sold	5632200	4481400	10113600
Gross Profit	3620700	1018500	4639200
Operating Expenses:
Selling Expenses	661000	361000	1022000
Administrative Expenses	545000	344000	889000
Total Operating Expenses	1206000	705000	1911000
Income from Operations	2414700	313500	2728200
Interest expense			150000
Income before Income Taxes			2578200
Income Tax Expense			773460	=2578200*30%
Net Income/ (Loss)			1804740