I just need help with the selling and administrative expense budget and budgeted income statement
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 first 2 quarters of 2017. 1. Sales: quarter 1, 40,000 bags; quarter 2, 56,000 bags. Selling price is $60 per bag. 2. Direct materials: each bag of Snare requires 4 pounds of Gumm at a cost of $3.8 per pound and 6 pounds of Tarr at $1.5 per pound. 3. Desired inventory levels: Type of Inventory Snare (bags) Gumm (pounds) Tarr (pounds) January 1 8,000 9,000 14,000 April 1 15,000 10,000 20,000 July 1 18,000 13,000 25,000 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 $175,000 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 $297,000 in quarter 1 and $439,500 in quarter 2. (Note: Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.) Prepare the selling and administrative expense budget. COOK FARM SUPPLY COMPANY Selling and Administrative Expense Budget Quarter Six Months 2 $ $ V Prepare the budgeted multiple-step income statement for the first 6 months. (Round intermediate calculations to 2 decimal places and final answer to 0 decimal places, e.g. 1,255.) COOK FARM SUPPLY COMPANY Budgeted Income Statement Prepare the sales budget. COOK FARM SUPPLY COMPANY Sales Budget For the Six Months Ending June 30, 2017 V Quarter 1 2 Six Months Expected unit sales 40,000 56,000 96,000 Unit selling price $ 60 $ 60 $ 60 Total sales $ 2,400,000 3,360,000 $ 5,760,000 Prepare the production budget. COOK FARM SUPPLY COMPANY Production Budget For the Six Months Ending June 30, 2017 V Quarter 1 Six Months 2 Expected Unit Sales 40,000 56,000 Add : Desired Ending Finished Goods Units 15,000 18,000 Total Materials Required 55,000 74,000 Less V Beginning Finished Goods Units (8000) (15000) Required Production Units 47000 59,000 106,000 Prepare the direct materials budget. (Round Cost per pound answers to 2 decimal places, e.g. 52.70.) 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, 2017 Quarter 1 Six Months 2 Units to be produced 47,000 59,000 Direct Materials per Unit 4 4 Total Pounds Needed for Production 188000 236000 Add : Desired Ending Finished Goods Units 10,000 13,000 Total Materials Required 198000 249000 Less : Beginning Direct Materials (9000) (10,000) Direct Materials Purchases 189,000 239,000 Cost per Pound $ 3.8 3.8 Total Cost of Direct Materials Purchases $ 718,200 $ 908,200 $ 1,626,400 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, 2017 Quarter Six Months 2 Units to be produced 47,000 59,000 Direct Labor Time per Unit 0.25 0.25 Total Required Direct Labor Hours 11,750 14,750 Direct Labor Cost per Hour 16 $ 16 Total Direct Labor Cost 188000 $ 236,000 424,000
