PROBLEM 9-43FreshPak 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 followingmaterial and labor requirements.Type of BoxC PDirect material required per 100 boxes:Paperboard ($.20 per pound) …………………………………………………………………………….. 30 pounds 70 poundsCorrugating medium ($.10 per pound) ………………………………………………………………… 20 pounds 30 poundsDirect labor required per 100 boxes ($12.00 per hour) ……………………………………………….. .25 hour .50 hourThe following manufacturing-overhead costs are anticipated for the next year. The predeterminedoverhead rate is based on a production volume of 495 000 units for each type of box. Manufacturingoverhead is applied on the basis of direct-labor hours.Indirect material ……………………………………………………………………………………………………………………… $ 10 500Indirect labor …………………………………………………………………………………………………………………………….. 50 000Utilities …………………………………………………………………………………………………………………………………….. 25 000Property taxes …………………………………………………………………………………………………………………………… 18 000Insurance ………………………………………………………………………………………………………………………………….. 16 000Depreciation ……………………………………………………………………………………………………………………………… 29 000Total …………………………………………………………………………………………………………………………………….. $148 500The following selling and administrative expenses are anticipated for the next year.Salaries and fringe benefits of sales personnel ……………………………………………………………………………….. $ 75 000Advertising ………………………………………………………………………………………………………………………………. 15 000Management salaries and fringe benefits …………………………………………………………………………………………. 90 000Clerical wages and fringe benefits ………………………………………………………………………………………………….. 26 000Miscellaneous administrative expenses ……………………………………………………………………………………………… 4 000Total …………………………………………………………………………………………………………………………………….. $210 000The sales forecast for the next year is as follows:Sales Volume Sales PriceBox type C …………………………………………………………………………….. 500 000 boxes $ 90.00 per hundred boxesBox type P …………………………………………………………………………….. 500 000 boxes 130.00 per hundred boxesThe following inventory information is available for the next year. The unit production costs foreach product are expected to be the same this year and next year.Expected InventoryJanuary 1Desired Ending InventoryDecember 31Finished goods:Box type C …………………………………………………………………….. 10 000 boxes 5 000 boxesBox type P ……………………………………………………………………… 20 000 boxes 15 000 boxesRaw material:Paperboard …………………………………………………………………… 15 000 pounds 5 000 poundsCorrugating medium ……………………………………………………….. 5 000 pounds 10 000 poundsRequired: Prepare a master budget for FreshPak Corporation for the next year. Assume an income tax rate of 40 percent. Include the following schedules.1. Sales budget.2. Production budget.3. Direct-material budget.4. Direct-labor budget.5. Manufacturing-overhead budget.6. Selling and administrative expense budget.7. Budgeted income statement. ( Hint: To determine cost of goods sold first compute the manufacturing cost per unit for each type of box. Include applied manufacturing overhead in the cost.)EXERCISE 11-26The following data are the actual results for Marvelous Marshmallow Company for October.Actual output ………………………………………………………………………………………………………………… 9 000 casesActual variable overhead …………………………………………………………………………………………………. $405 000Actual fixed overhead ……………………………………………………………………………………………………… $122 000Actual machine time ………………………………………………………………………………………………… 40 500 machine hoursStandard cost and budget information for Marvelous Marshmallow Company follows:Standard variable-overhead rate ………………………………………………………………………… $9.00 per machine hourStandard quantity of machine hours ……………………………………………………………. 4 hours per case of marshmallowsBudgeted fixed overhead ………………………………………………………………………………….. $120 000 per monthBudgeted output …………………………………………………………………………………………….. 10 000 cases per monthRequired:1. Use any of the methods explained in the chapter to compute the following variances. Indicate whether each variance is favorable or unfavorable where appropriate.a. Variable-overhead spending variance.b. Variable-overhead efficiency variance.2. Build a spreadsheet: Construct an Excel spreadsheet to solve the preceding requirement. Show how the solution will change if the following information changes: actual output was 9 100 cases and actual variable overhead was $395 000.
