Deleon Inc. is preparing its annual budgets for the year ending December 31

Deleon Inc. is preparing its annual budgets for the year ending December 31, 2014. Accounting assistants furnish the data shown below.

                                                                   Product JB 50                Product JB 60

Sales budget:

          Anticipated volume in units                     400,000                 200,000

          Unit selling price                                         $20                       $25

Production budget:

          Desire ending finished goods units        30,000                   15,000

          Beginning finished goods units                 25,000                   10,000

Direct material budget:

          Direct material per unit (pounds)               2                           3

          Desired ending direct material pounds      30,000                   10,000

          Beginning direct material pounds              40,000                   15,000

          Cost per pound                                           $3                         $4

Direct labor budget:

          Direct labor time per unit                           $0.4                      $0.6

          Direct labor rate per hour                           $12                       $12

Budgeted income statement:

          Total unit cost                                            $13                       $20   

.:.

An accounting assistant has prepared the detailed manufacturing overhead budget and the selling and administrative expense budget. The latter shows selling expenses of $560,000 for product JB 50 and $360,000 for product JB 60, and administrative expenses of $540,000 for product JB 50 and $340,000 for product JB 60. Income taxes are expected to be 30%.

Instructions

Prepare the following budgets for the year. Show data for each product. Quarterly budgets should not be prepared.

(a) Sales

(b) Production

(c) Direct materials

(d) Direct labor

(e) Income statement

(a)

DELEON INC.

Sales Budget

For the Year Ending December 31, 2014

                                                                                                                                                                     

			JB 50		JB 60		Total
	Expected unit sales.................... Unit selling price......................... Total sales....................................		400,000      X  $20 $8,000,000		200,000      X  $25 $5,000,000		000,000,0 $13,000,000

(b)

DELEON INC.

Production Budget

For the Year Ending December 31, 2014

                                                                                                                                              

			JB 50		JB 60
	Expected unit sales............................................ Add:   Desired ending finished                goods units........................................... Total required units............................................ Less:  Beginning finished goods                units....................................................... Required production units................................		400,000  30,000 430,000  25,000 405,000		200,000  15,000 215,000  10,000 205,000

(c)

                                                                           DELEON INC.

                                                                  Direct Materials Budget

                                                  For the Year Ending December 31, 2014

                                                                                                                                                                     

			JB 50		JB 60		Total
	Units to be produced............................ Direct materials per unit....................... Total pounds needed for   production.......................................... Add:   Desired ending direct               materials (pounds).................. Total materials required....................... Less:  Beginning direct               materials (pounds).................. Direct materials purchases.................. Cost per pound...................................... Total cost of direct materials   purchases........................................		405,000       X  2    810,000     30,000    840,000     40,000    800,000      X  $3 $2,400,000		205,000       X  3    615,000     10,000    625,000        15,000    610,000      X  $4 $2,440,000		$4,840,000

(d)

DELEON INC.

Direct Labor Budget

For the Year Ending December 31, 2014

                                                                                                                                                                     

			JB 50		JB 60		Total
	Units to be produced............................ Direct labor time (hours) per   unit                                                       Total required direct labor   hours.................................................. Direct labor cost per hour.................... Total direct labor cost............................		405,000       X  .4      162,000     X  $12 $1,944,000		205,000       X  .6    123,000     X  $12 $1,476,000		650,000                   —    301,000 X             $10 $3,420,000

(e)

DELEON INC.

Budgeted Income Statement

For the Year Ending December 31, 2014

                                                                                                                                                                     

			JB 50		JB 60		Total
	Sales  Cost of goods sold......................... Gross profit...................................... Operating expenses   Selling expenses.......................   Administrative     expenses................................       Total operating         expenses....................... Income before income   taxes............................................. Income tax expense   (30%)............................................ Net income......................................		$8,000,000  5,200,000  2,800,000    560,000    540,000  1,100,000 $1,700,000	(1)	$5,000,000   4,000,000   1,000,000    360,000    340,000    700,000 $  300,000	(2)	$13,000,000   9,200,000   3,800,000   920,000     880,000   1,800,000   2,000,000     600,000 $ 1,400,000

          ⁽¹⁾400,000 X $13.

          ⁽²⁾200,000 X $20.