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 2020. 1. Sales: quarter 1, 29,200 bags: quarter 2. 42,200 bags. Selling price is $63 per bag. 2. Direct materials: each bag of Snare requires 5 pounds of Gumm at a cost of $3.80 per pound and 6 pounds of Tarr at $1.50 per pound. 3. Desired inventory levels: Type of Inventory January 1 April 1 July 1 Snare (bags) 8,200 12,200 18,400 Gumm (pounds) 9,300 10,300 13,200 14,500 20,300 25,300 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 $179,000 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 $303,000 in quarter 1 and $426,500 in quarter 2. (Note: Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.) Your answer is correct. Prepare the sales budget. COOK FARM SUPPLY COMPANY Sales Budget For the Six Months Ending June 30, 2020 Quarter Six Months Expected Unit Sales 29200 42200 71400 Unit Selling Price Total Sales $ 1839600 $ 2658600 $ 4498200 Prepare the production budget. COOK FARM SUPPLY COMPANY Production Budget For the Six Months Ending June 30, 2020 Quarter 2 Six Months Expected Unit Sales 29200 42200 Add : Desired Ending Finished Goods Units 18400 Total Required Units C D 60600 Total Required Units Less : Beginning Finished Goods Units Required Production Unit 12200 4 1400 8200 D C 3 3200 1 12200 2 i C [ 48400 eTextbook and Media Attempts: 3 of 7 used (b) Your answer is partially correct. Prepare the direct materials budget. (Round Cost per pound answers to 2 decimal places, e.g. 52.70.) COOK FARM SUPPLY COMPANY Direct Materials Budget-Gumm For the Six Months Ending June 30, 2020 Quarter Six Months Units to be Produced 33200 48400 Direct Materials per Unit 166000 242000 10300 13200 176300 255200 Add : Desired Ending Finished Goods Units Total Required Direct Labor Hours Less : Beginning Direct Materials (Pounds) Total Cost of Direct Materials Purchases 9300 i 10300 244900 167000 3.80 Cost per Pound $ $ 3.80 634600 930620 $ Prepare the direct labor budget. (Enter Direct labor time per unit in proportion to hours, e.g. for 45 minutes the proportion will be 0.75.) COOK FARM SUPPLY COMPANY Direct Labor Budget For the Six Months Ending June 30, 2020 Quarter Six Months Units to be produced 48400 Direct Labor Time (Hours) per Unit Total Required Units 12100 Direct Labor Cost per Hour Total Direct Labor Cost 32800 0 $ 193.00 $ 326400 Prepare the selling and administrative expense budget. COOK FARM SUPPLY COMPANY Selling and Administrative Expense Budget For the Six Months Ending June 30, 2020 Quarter Six Months Variable Expenses 275940 $ 398790 $ 674730 Fixed Expenses Fixed Expenses 179000 $ 179000 $ 358000 Sales Total Selling and Administrative Expenses 0 4 54940 577790 1032730 Save for Later Attempts: 1 of 7 used Submit
