Question

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
Sales budget:
Anticipated volume in units		404,400		202,600
Unit selling price		$23		$28
Production budget:
Desired ending finished goods units		27,300		19,000
Beginning finished goods units		34,700		13,000
Direct materials budget:
Direct materials per unit (pounds)		2		2
Desired ending direct materials pounds		34,200		19,400
Beginning direct materials pounds		44,400		12,000
Cost per pound		$3		$3
Direct labor budget:
Direct labor time per unit		0.4		0.6
Direct labor rate per hour		$10		$10
Budgeted income statement:
Total unit cost		$14		$22

An accounting assistant has prepared the detailed manufacturing overhead budget and the selling and administrative expense budget. The latter shows selling expenses of $663,000 for product JB 50 and $361,000 for product JB 60, and administrative expenses of $544,000 for product JB 50 and $343,000 for product JB 60. Interest expense is $150,000 (not allocated to products). Income taxes are expected to be 30%.

Prepare the budegeted multiple-step income statement for the year. (Note: income taxes are not allocated to the products).

DELEON INC. Budgeted Income Statement choose the accounting period For the Year Ending December 31, 2020
		JB 50		JB 60		Total
select an income statement item		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
select an income statement item		enter a dollar amount		enter a dollar amount		enter a dollar amount
select a summarizing line for the first part		enter a total amount for the first part		enter a total amount for the first part		enter a total amount for the first part
select an opening name for section two
select an income statement item		enter a dollar amount		enter a dollar amount		enter a dollar amount
select an income statement item		enter a dollar amount		enter a dollar amount		enter a dollar amount
select a closing name for section two		enter a total amount for section two		enter a total amount for section two		enter a total amount for section two
select a summarizing line for the second part		$enter a total amount for the second part		$enter a total amount for the second part		enter a total amount for the second part
select an income statement item						enter a dollar amount
select a summarizing line for the third part						enter a total amount for the third part
select an income statement item						enter a dollar amount
select a closing name for the budgeted income statement						$enter a total net income or loss amount

Answer 1

1. According to the question, we need to prepare the budgeted multiple-step income statement for the year.

Deleon Inc. Budgeted multiple-step income statement for the year ending December 31, 2020.
Particulars	JB 50	JB 60	Total
Sales (Anticipated volume*Unit selling price) (a)	$9,301,200	$5,672,800	$14,974,000
Less: Cost of Goods sold:-(Units*cost)
Job 50- (404,400*$14) Job60- (202600*$22) (b)	$5,661,600	$4,457,200	$10,118,800
Gross margin (a-b)	$3,639,600	$1,215,600	$4,855,200
Operating expenses:
Selling expenses	$663,000	$361,000	$1,024,000
Administrative expenses	$544,000	$343,000	$887,000
Total operating expenses	$1,207,000	$704,000	$1,911,000
Operating Income	$2,432,600	$511,600	$2,944,200
Interest expense			$150,000
Income before taxes			$2,794,200
Income tax (30%)			$838,260
Net Income			$1,955,940