Question

Problem 22-02A 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 60 403,400 $22 201,800 $27 27,500 32,800 17,200 13,800 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 31,100 42,600 17,800 12,000 0.3 $10 0.6 $13 $22 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 $361,000 for product JB 60, and administrative expenses of $541,000 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%.

Answer 1

DELEON INC.
Sales Budget
For the Year Ending December 31, 2020
	JB 50	JB 60	Total
Expected unit sales	403,400	201,800
Unit selling price	$22	$27
Total sales   [Expected unit sales x Unit selling price]	$8,874,800	$5,448,600	$14,323,400

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DELEON INC.
Production Budget
For the Year Ending December 31, 2020
	JB 50	JB 60
Expected unit sales	403,400	201,800
Add: Desired Ending Finished Goods Units	27,500	17,200
Total Required Units	430,900	219,000
Less: Beginning Finished Goods Units	32,800	13,800
Required Production Units	398,100	205,200

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DELEON INC.
Direct Material Budget
For the Year Ending December 31, 2020
	JB 50	JB 60	Total
Units to be produced     [Refer production budget]      (a)	398,100	205,200
Direct Materials per Unit         (In pounds)                 (b)	2	3
Total Pounds Needed for Production                       (a x b)	796,200	615,600
Add: Desired Ending Direct Materials (pounds)	31,100	17,800
Total Materials Required	827,300	633,400
Less: Beginning Direct Materials (pounds)	42,600	12,000
Direct Materials Purchases                                     (c)	784,700	621,400
Cost per Pound                                                        (d)	$2	$3
Total Cost of Direct Materials Purchases        (c x d)	$1,569,400	$1,864,200	$3,433,600

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