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1 2. Sales: quarter 1, 28,600 bags quarter 2,43,400 bags. Selling price is $62 per bag Direct materials: each bag of Snare requires 5 pounds

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1 2. Sales: quarter 1, 28,600 bags quarter 2,43,400 bags. Selling price is $62 per bag Direct materials: each bag of Snare requires 5 pounds of Gumm at a cost of $3.80 per pound and 6 pounds of Tarrat $1.50 per pound. Desired inventory levels: 3. January 1 April 1 July 1 Type of Inventory Snare (bags) Gumm (pounds) 8,400 12,300 18,300 9,400 10,500 13,500 Tarr (pounds) 14,300 20,400 25,100 4. 5. Direct labor direct labor time is 15 minutes per bag at an hourly rate of $16 per hour. Selling and administrative expenses are expected to be 15% of sales plus $178,000 per quarter. Interest expense is $100,000 Income taxes are expected to be 30% of income before income taxes. 6. 7. Your assistant has prepared two budgets: (1) the manufacturing overhead budget shows expected costs to be 125% of direct labor cost, and (2) the direct materials budget for Torr shows the cost of Tarr purchases to be $299,000 in quarter 1 and $426,500 in quarter 2

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