Question

Unit 5 Lab--Principles of Accounting II

Problem 24-02A a-e

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 402,600 201,800

Unit selling price $23 $27

Production budget:

Desired ending finished goods units 28,700 19,900

Beginning finished goods units 34,800 14,100

Direct materials budget:

Direct materials per unit (pounds) 2 3

Desired ending direct materials pounds 34,800 19,900

Beginning direct materials pounds 43,300 12,700

Cost per pound $3   $3

Direct labor budget:

Direct labor time per unit 0.4 0.6

Direct labor rate per hour $12 $12

Budgeted income statement:

Total unit cost $12 $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 $365,000 for product JB 60, and administrative expenses of $544,000 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.

b. Prepare the production budget for the year.

c. Prepare the direct materials budget for the year.

d. Prepare the direct labor budget for the year.

e. Prepare the budegeted multiple-step income statement for the year

Answer 1

Solution:

Part 1 – Sales Budget

Sales Budget
	Unit Sales Volume	Unit Selling Price	Total Sales
Product JB 50	402600	$23	$9,259,800
Product JB 60	201800	$27	$5,448,600
Total Revenue from Sales			$14,708,400

Part 2 - Prepare the production budget for the year

Production Budget
	Product JB 50	Product JB 60
Expected Sales Units	402600	201800
Plus: Desired Ending Finished Goods Inventory	28700	19900
Total Needs	431300	221700
Less: Beginning Finished Goods Inventory	34800	14100
Required Production in units	396500	207600

Part 3 – Direct material budget

Direct materials budget
	Product JB 50	Product JB 60
Required Production in units	396500	207600
Direct materials required per unit (in pounds)	2	3
Total required direct materials for production (in pound)	793000	622800
Plus: Desired Ending direct materials pounds	34800	19900
Total needs	827800	642700
Less: Beginning direct materials pound	43300	12700
Required direct materials in pound	784500	630000
Cost per pound	$3	$3
Direct materials purchase budget in dollars	$2,353,500	$1,890,000

Part 4 – Direct labor budget

Direct labor budget
	Product JB 50	Product JB 60
Required Production in units	396500	207600
Direct labor time per unit	0.4	0.6
Total required direct labor time	158600	124560
Direct labor rate per hour	$12	$12
Budgeted direct labor in dollars	$1,903,200	$1,494,720

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