Cook Farm Supply Company manufactures and sells a pesticide called Snare. The following data are available for preparing budgets for Snare for the first 2 quarters of 2017. 1.Sales: quarter 1, 28,600 bags; quarter 2, 42,600 bags. Selling price is $63 per bag. 2.Direct materials: each bag of Snare requires 5 pounds of Gumm at a cost of $3.8 per pound and 6 pounds of Tarr at $1.75 per pound. 3.Desired inventory levels: 4.Direct labor: direct labor time is 15 minutes per bag at an hourly rate of $16 per hour. 5.Selling and administrative expenses are expected to be 15% of sales plus $176,000 per quarter. 6.Interest expense is $100,000. 7.Income taxes are expected to be 30% of income before income taxes. 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 Tarr shows the cost of Tarr purchases to be $300,000 in quarter 1 and $422,500 in quarter 2.

Problem 23-1A Cook Farm Supply Company manufactures and sells a pesticide called Snare. The following data are available for preparing budgets for Snare for the frst 2 quarters of 2017 1. Sal quarter 1, 28,600 bags; quarter 2, 42,600 bags. Selling price is $63 per bag 2. Direct materials: each bag of Snare requires 5 pounds of Gumm at a cost of $3.8 per pound and 6 pounds of Tarr at $1.75 per pound 3. Desired inventory levels: Type of Inventor January1April 1 Snare (bags) Gumm (pounds) Tarr (pounds) 8,200 9,400 14,500 12,100 10,300 20,100 18,500 13,400 25,500 4. Direct labor: direct labor time is 15 minutes per bag at an hourly rate of $16 per hour. 5. Selling and administrative expenses are expected to be 15% of sales plus $176,000 per quarter. 6. Interest expense is $100,000 7. Income taxes are expected to be 30% of income before income taxes 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 Tarr shows the cost of Trpuchases to be $300,000 in quarter 1 and $422,500 in quarter 2 (Note: Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.)