Novak Farm Supply Company manufactures and sells a fertilizer called Snare. The following data are available for preparing budgets for Snare for the first two quarters of 2022.

1. Sales: Quarter 1, 30,000 bags; quarter 2, 43,000 bags. Selling price is $60 per bag. 2. Direct materials: Each bag of Snare requires 4 kg of Gumm at $4.00 per kilogram and 6 kg of Tarr at $1.50 per kilogram. 3. Desired inventory levels: Type of Inventory

January 1

April 1

July 1

Snare (bags)

9,000 14,000 20,000 Gumm (kg)

8,000 11,000 12,000 Tarr (kg)

13,000 21,000 23,000 4. Direct labour: Direct labour time is 15 minutes per bag at an hourly rate of $12.00 per hour. 5. The company expects selling and administrative expenses to be 15% of sales plus $174,000 per quarter. 6. It expects income taxes 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 labour cost. (2) The direct materials budget for Tarr shows the cost of Tarr purchases to be $295,000 in quarter 1 and $437,000 in quarter 2.

Prepare the following operating budgets by quarters. (Note: Classify items as variable and fixed in the selling and administrative expenses budget.) Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.

Prepare the sales budget by quarters.

NOVAK FARM SUPPLY COMPANY Sales Budget For the Six Months Ending June 30, 2022

Quarter

1

2

Six Months

Expected sales in units

enter a number of units enter a number of units enter a number of units Unit selling price

$enter a dollar amount $enter a dollar amount $enter a dollar amount Total sales

$enter a total dollar amount $enter a total dollar amount $enter a total dollar amount Prepare the production budget by quarters.

NOVAK FARM SUPPLY COMPANY Production Budget For the Six Months Ending June 30, 2022

Quarter

1

2

Six Months

select an opening production budget item Required production in unitsTotal required unitsExpected unit salesDesired ending finished goodsBeginning finished goods inventory

enter a number of units enter a number of units enter a number of units select between addition and deduction LessAdd: select a production budget item Beginning finished goods inventoryRequired production in unitsExpected unit salesTotal required unitsDesired ending finished goods

enter a number of units enter a number of units enter a number of units select a summarizing line for the first part Desired ending finished goodsExpected unit salesRequired production in unitsBeginning finished goods inventoryTotal required units

enter a total number of units for the first part enter a total number of units for the first part enter a total number of units for the first part select between addition and deduction LessAdd: select a production budget item Total required unitsBeginning finished goods inventoryDesired ending finished goodsRequired production in unitsExpected unit sales

enter a number of units enter a number of units enter a number of units select a closing production budget item Beginning finished goods inventoryRequired production in unitsExpected unit salesTotal required unitsDesired ending finished goods

enter a total number of units enter a total number of units enter a total number of units Prepare the direct labour budget by quarters. (Round direct labour hours per unit to 2 decimal places, e.g. 0.15.)

NOVAK FARM SUPPLY COMPANY Direct Labour Budget For the Six Months Ending June 30, 2022

Quarter

1

2

Six Months

select an opening direct labour budget item Units to be producedDirect labour hours per unitDirect labour cost per hourTotal cost of direct labourTotal required for production

enter a number of units enter a number of units enter a number of units select a labour budget item Total cost of direct labourDirect labour hours per unitUnits to be producedTotal required for productionDirect labour cost per hour

enter a number of hours rounded to 2 decimal places enter a number of hours rounded to 2 decimal places enter a number of hours rounded to 2 decimal places select a summarizing line for the first part Total required for productionDirect labour cost per hourTotal cost of direct labourDirect labour hours per unitUnits to be produced

enter a total number of hours for the first part enter a total number of hours for the first part enter a total number of hours for the first part select a labour budget item Total required for productionDirect labour cost per hourUnits to be producedDirect labour hours per unitTotal cost of direct labour

$enter a dollar amount rounded to 2 decimal places $enter a dollar amount rounded to 2 decimal places $enter a dollar amount rounded to 2 decimal places select a closing direct labour budget item Direct labour cost per hourDirect labour hours per unitTotal cost of direct labourUnits to be producedTotal required for production

$enter a total dollar amount