Question

1. Prepare the sales budget for the year.
2. Prepare the production budget for the year.
3. Prepare the direct materials budget for the year.
4. Prepare the direct labor budget for the year. (Round Direct labor time per unit answers to 1 decimal place, e.g. 52.5.)
5. Prepare the budegeted multiple-step income statement for the year. (Note: income taxes are not allocated to the products).

Ayayai 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 60 401,000 $21 201,000 $27 26,000 31,000 16,000 11,000 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 31,000 41,000 $2 16,000 11,000 $3 0.3 0.6 $10 $10 Budgeted income statement: Total unit cost $12 $21 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 $541,000 for product JB 50 and $341,000 for product JB 60. Interest expense is $150,000 (not allocated to products). Income taxes are expected to be 30%.

Answer 1

Solution 1:

Sales Budget - Deleon Inc.
Particulars	JB50	JB60	Total
Expected unit sales	401000	201000
Selling price per unit	$21.00	$27.00
Projected Sales Revenue	$8,421,000.00	$5,427,000.00	$13,848,000.00

Solution 2:

Production Budget - Deleon Inc.
Particulars	JB50	JB60
Expected unit sales	401000	201000
Add: Desired ending inventory	26000	16000
Total required units	427000	217000
Less: Beginning Inventory	31000	11000
Budgeted production units	396000	206000

Solution 3:

Material Purchase Budget - Deleon Inc.
Particulars	JB50	JB60	Total
Budgeted production units	396000	206000
Material required per unit (In pound)	1	2
Total material requirement	396000	412000
Add: Desired units of material in ending inventory	31000	16000
Total material required	427000	428000
Less: units of material in beginning inventory	41000	11000
Budgeted purchase of raw material (In pound)	386000	417000
Cost per pound	$2.00	$3.00
Budgeted purchase of raw material	$772,000.00	$1,251,000.00	$2,023,000.00

Solution 4:

Direct labor Budget - Deleon Inc.
Particulars	JB50	JB60	Total
Budgeted production units	396000	206000
Direct labor hour per unit	0.3	0.6
Total direct labor hours	118800	123600
Direct labor rate per hour	$10.00	$10.00
Budgeted Direct labor cost	$1,188,000.00	$1,236,000.00	$2,424,000.00

Solution 5:

Budgeted Income Statement - Deleon Inc. For the year ended Dec 31, 2017
Particulars	JB50	JB60	Total
Sales Revenue	$8,421,000.00	$5,427,000.00	$13,848,000.00
Cost of goods sold JB 50 - 401000*$12 JB 60 - 201000*$21	$4,812,000.00	$4,221,000.00	$9,033,000.00
Gross Profit	$3,609,000.00	$1,206,000.00	$4,815,000.00
Operating Expenses:
Selling Expenses	$661,000.00	$361,000.00	$1,022,000.00
Administrative expenses	$541,000.00	$341,000.00	$882,000.00
Total Operating expenses	$1,202,000.00	$702,000.00	$1,904,000.00
Operating Income	$2,407,000.00	$504,000.00	$2,911,000.00
Interest expense			$150,000.00
Income before taxes			$2,761,000.00
Income tax expense (30%)			$828,300.00
Net Income			$1,932,700.00