Glendo 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 2014.

1.		Sales: Quarter 1, 28,800 bags; quarter 2, 43,000 bags. Selling price is $61 per bag.
2.		Direct materials: Each bag of Snare requires 5 pounds of Gumm at a cost of $4 per pound and 6 pounds of Tarr at $1.75 per pound.
3.		Desired inventory levels:

Type of Inventory		January 1		April 1		July 1
Snare (bags)		8,200		12,400		18,400
Gumm (pounds)		9,300		10,400		13,500
Tarr (pounds)		14,300		20,200		25,200

4.		Direct labor: Direct labor time is 15 minutes per bag at an hourly rate of $14 per hour.
5.		Selling and administrative expenses are expected to be 15% of sales plus $180,000 per quarter.
6.		Income taxes are expected to be 30% of income from operations.

Your assistant has prepared two budgets: (1) The manufacturing overhead budget shows expected costs to be 150% of direct labor cost. (2) The direct materials budget for Tarr shows the cost of Tarr purchases to be $300,000 in quarter 1 and $425,000 in quarter 2.

(a)

Prepare the sales budget.

GLENDO FARM SUPPLY COMPANY Sales Budget For the Six Months Ending June 30, 2014
		Quarter				Six Months
		1		2
Expected unit sales
Unit selling price		$		$		$
Total sales		$		$		$

Prepare the production budget.

GLENDO FARM SUPPLY COMPANY Production Budget For the Six Months Ending June 30, 2014
		Quarter				Six Months
		1		2
Beginning Direct MaterialsBeginning Finished Goods UnitsCost per PoundDesired Ending Direct MaterialsDesired Ending Finished Goods UnitsDirect Labor Cost per HourDirect Labor Time per UnitDirect Materials per UnitDirect Materials PurchasesExpected Unit SalesRequired Production UnitsTotal Cost of Direct Materials PurchasesTotal Direct Labor CostTotal Materials RequiredTotal Pounds Needed for ProductionTotal Required Direct Labor HoursTotal Required Units
AddLess: Beginning Direct MaterialsBeginning Finished Goods UnitsCost per PoundDesired Ending Direct MaterialsDesired Ending Finished Goods UnitsDirect Labor Cost per HourDirect Labor Time per UnitDirect Materials per UnitDirect Materials PurchasesExpected Unit SalesRequired Production UnitsTotal Cost of Direct Materials PurchasesTotal Direct Labor CostTotal Materials RequiredTotal Pounds Needed for ProductionTotal Required Direct Labor HoursTotal Required Units
Beginning Direct MaterialsBeginning Finished Goods UnitsCost per PoundDesired Ending Direct MaterialsDesired Ending Finished Goods UnitsDirect Labor Cost per HourDirect Labor Time per UnitDirect Materials per UnitDirect Materials PurchasesExpected Unit SalesRequired Production UnitsTotal Cost of Direct Materials PurchasesTotal Direct Labor CostTotal Materials RequiredTotal Pounds Needed for ProductionTotal Required Direct Labor HoursTotal Required Units
AddLess: Beginning Direct MaterialsBeginning Finished Goods UnitsCost per PoundDesired Ending Direct MaterialsDesired Ending Finished Goods UnitsDirect Labor Cost per HourDirect Labor Time per UnitDirect Materials per UnitDirect Materials PurchasesExpected Unit SalesRequired Production UnitsTotal Cost of Direct Materials PurchasesTotal Direct Labor CostTotal Materials RequiredTotal Pounds Needed for ProductionTotal Required Direct Labor HoursTotal Required Units
Beginning Direct MaterialsBeginning Finished Goods UnitsCost per PoundDesired Ending Direct MaterialsDesired Ending Finished Goods UnitsDirect Labor Cost per HourDirect Labor Time per UnitDirect Materials per UnitDirect Materials PurchasesExpected Unit SalesRequired Production UnitsTotal Cost of Direct Materials PurchasesTotal Direct Labor CostTotal Materials RequiredTotal Pounds Needed for ProductionTotal Required Direct Labor HoursTotal Required Units