Problem 212A Deleon Inc is preparing its annual budgets for

Problem 21-2A Deleon Inc. is preparing its annual budgets for the year ending December 31, 2017. Accounting assistants furnish the data shown below Product B 50 Product JB 60 Sales budget 402,800 203,900 $28 Anticipated volume in units Unit selling price $23 Production budget Desired ending finished goods units Beginning finished goods units 27,800 34,900 19,000 13,600 Direct materials budget: Direct materials per unit (pounds) Desired ending direct materials pounds Beginning direct materials pounds Cost per pound 2 32,100 43,000 $3 18,500 14,600 $3 Direct labor budget: Direct labor time per unit Direct labor rate per hour Budgeted income statement 0.6 $12 $12 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 $661,000 for product JB 50 and $365,000 for product JB 60, and administrative expenses of $543,000 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%

Solution

Solution :

DELEON INC.
Budgeted Income Statement
For the year ending December 31, 2017
	JB 50	JB 60	Total
Sales	$9,264,400.00	$5,709,200.00	$14,973,600.00
Cost of goods sold (Units sales*total unit cost)	$5,639,200.00	$4,281,900.00	$9,921,100.00
Gross Profit	$3,625,200.00	$1,427,300.00	$5,052,500.00
Operating Expenses:
Selling Expenses	$661,000.00	$365,000.00	$1,026,000.00
Administrative expenses	$543,000.00	$342,000.00	$885,000.00
Total Operating expenses	$1,204,000.00	$707,000.00	$1,911,000.00
Income from Operations	$2,421,200.00	$720,300.00	$3,141,500.00
Interest Expenses			$150,000.00
Income Before Income Taxes			$2,991,500.00
Income Tax Expense ($2,991,500*30%)			$897,450.00
Net Income / (Loss)			$2,094,050.00