FreshPak Corporation manufactures two types of cardboard boxes used in shipping canned food, fruit, and vegetables. The canned food box (type C) and the perishable food box (type P) have the following material and labor requirements.

Type of Box

C P

Direct material required per 100 boxes:

Paperboard ($0. 40 per pound) 45 pounds 85 pounds

Corrugating medium ($0. 20 per pound) 35 pounds 45 pounds

Direct labor required per 100 boxes-

($20. 00 per hour) 0. 30 hour 0. 60 hour


The following production-overhead costs are anticipated for the next year. The predetermined overhead rate is based on a production volume of 460,000 units for each type of box. Production overhead is applied on the basis of direct labor hours.


Indirect material $13,950

Indirect labor 88,450

Utilities 43,500

Property taxes 29,000

Insurance 22,000

Depreciation 51,500

Total $248,400


The following selling and administrative expenses are anticipated for the next year:


Salaries and fringe benefits of sales personnel $133,500

Advertising 29,500

Management salaries and fringe benefits 149,000

Clerical wages and fringe benefits 46,000

Miscellaneous administrative expenses 7,400

Total $365,400


The sales forecast for the next year is as follows:


Sales Volume Sales Price

Box type C 465,000 boxes $135. 00 per hundred boxes

Box type P 465,000 boxes 195. 00 per hundred boxes


The following Inventory Information is available for the next year. The unit production costs for each product are expected to be the same this year and next year.


Expected Inventory January 1 Desired Ending Inventory

December 31

Finished goods:

Box type C 13,500 boxes 8,500 boxes

Box type P 23,500 boxes 18,500 boxes

Raw material:

Paperboard 15,000 pounds 5,000 pounds

Corrugating medium 6,000 pounds 11,000 pounds


Required:

Prepare a master budget for FreshPak Corporation for the next year. Assume an Income tax rate of 40 percent