Question

Deleon Inc. is preparing its annual budgets for the year ending December 31, 2020. Accounting assistants furnish the data shown below.

		Product JB 50		Product JB 60
Sales budget:
Anticipated volume in units		402,300		201,600
Unit selling price		$23		$28
Production budget:
Desired ending finished goods units		27,300		19,500
Beginning finished goods units		31,300		11,800
Direct materials budget:
Direct materials per unit (pounds)		2		2
Desired ending direct materials pounds		32,700		19,500
Beginning direct materials pounds		41,500		12,400
Cost per pound		$3		$3
Direct labor budget:
Direct labor time per unit		0.4		0.6
Direct labor rate per hour		$11		$11
Budgeted income statement:
Total unit cost		$14		$21

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 $364,000 for product JB 60, and administrative expenses of $544,000 for product JB 50 and $342,000 for product JB 60. Interest expense is $150,000 (not allocated to products). Income taxes are expected to be 30%.

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Answer 1

DELEON INC. Sales Budget For the Year Ending December 31, 2020
	JB 50	JB 60	Total
Expected unit sales	402,300	201,600
Unit selling price	23	28
Total Sales	9252900	5644800	14897700

DELEON INC. Production Budget For the Year Ending December 31
Expected unit sales	402,300	201,600
Add:   Desired ending finished goods	27,300	19,500
Total required units	429,600	221,100
Less: Beginning finished goods units	31,300	11,800
Required production units	398,300	209,300

DELEON INC. Direct Materials Budget For the Year Ending December 31
	JB 50	JB 60	Total
Units to be produced	398,300	209,300
Direct materials per unit	2	2
Total pounds needed for production	796600	418600
Add:Desired ending direct materials	32,700	19,500
Total materials required	829,300	438,100
Less: Beginning direct materials	41,500	12,400
Direct materials purchases	787,800	425,700
Cost per pound	3	3
Total cost of direct material purchases	2363400	1277100	3640500

DELEON INC. Direct Labor Budget For the Year Ending December 31
	JB 50	JB 60	Total
Units to be produced	398,300	209,300
Direct labor time (hours) per unit	0.4	0.6
Total required direct labor hours	159320	125580
Direct labor cost per hour	11	11
Total direct labor cost	1752520	1381380	3133900

DELEON INC. Budgeted Income Statement For the Year Ending December 31
	JB 50	JB 60	Total
Sales	9252900	5644800	14897700
cost of goods sold 402,300*14,201,600*21	5632200	4233600	9865800
Gross profit	3620700	1411200	5031900
Operating expenses
Selling expenses	662,000	364,000	1,026,000
Administrative expenses	544000	342000	886,000
Total Operating expenses	1,206,000	706,000	1,912,000
Income before income taxes	2,414,700	705,200	3,119,900
Income tax expense @ 30%			935,970
Net income			2,183,930