PRINTER VERSION BACK NERT Practice Problem 1 CALCULATOR 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, 28,200 bags: quarter 2,42,400 bags. Selling price is $63 per bag. 2. Direct materials: each bag of Snare requires 4 pounds of Gumm at a cost of $3.80 per pound and 6 pounds of Tarrat $1.75 per pound. 3. Desired Inventory levels: Type of Inventory January 1 April 1 July 1 Snare (bags) 8,200 12,200 18,100 Gumm (pounds) 9,100 10,400 13,300 Tarr (pounds) 14,500 20,400 25,200 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 $180,000 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 $301,000 in quarter 1 and $422,500 in quarter 2 (Note: Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.) Prepare the sales budget COOK FARM SUPPLY COMPANY Sales Budget For the Six Months Ending June 30, 2020 Quarter 2 SI Months Expected unit sales Unit selling price $ Total sales Prepare the production budget. COOK FARM SUPPLY COMPANY Production Budget For the Six Months Ending June 30, 2020 Quarter 1 Six Months 2 Expected Unit Sales Add y Desired Ending Finished Goods Units Total Required Units Less Beginning Finished Goods Units Required Production Units 1 ES COOK FARM SUPPLY COMPANY Direct Materials Budget-Gumm For the Six Months Ending June 30, 2020 Quarter 1 Six Months 2 Units to be produced y Direct Materials per Unit v Total Pounds Needed for Production Add Desired Ending Direct Materials (Pounds) Total Materials Required Less Beginning Direct Materials (Pounds) Direct Materials Purchases Cost per Pound $ Total Cost of Direct Materials Purchases 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.) CALCULATOR PRINTER VER CES 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 1 2 Months dy Units to be produced Direct Labor Time (Hours) per Unit Total Required Direct Labor Hours Direct Labor Cost per Hour Total Direct Labor Cost 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 1 2 Six Months Budgeted sales in units Variable Cost Fixed Cost Total den Capace COOK FARM SUPPLY COMPANY Budgeted Income Statement For the Six Months Ending June 30, 2020 Sales Cost of Goods Sold Gross Profit Selling and Administrative Expenses Income from Operations Interest Expense Income Before Income Tax Income Tax Expense Net Income / (Loss) Click if you would like to Show Work for this question: Open Show Work By accessing this Question Assistance, you will learn while you earn points based on the Point Potential Policy set by your instructor SAVE FOR LATE Question Attempts: 0 of 1 used