Problem 21-1A 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, 28,600 bags; quarter 2, 42,800 bags. Selling price is $61 per bag. 2. Direct materials: each bag of Snare requires 5 pounds of Gumm at a cost $3.8 per pound and o pounds of Tar at $1,.50 per paund. 3. Desired inver levels: Type of Inventory January 1 April 1 July 1 Snare (bags" 8.300 12.300 18.200 Gumm (pounds) 9,100 10,300 13,300 Tarr (pounds) 14,500 20,300 25,400 5 minutes per bag at an hourly rate of $14 per hour 4. Direct labor: drect labor tme is f sales plus $177,000 per quarter 15% nses are expected to I 6 Interert axponre is tn0.nn0 7. Income taxes are expected to be 30% of income before income taxes. f Tarr purchases to be $303.000 in quarter 1 and $423,500 in Your assistant has prepared two budgets: (1) the manufacturing overhead budget shows expected costs to be 125% of direct labor cost, and ( quarter 2 ) the direct materials budget for Tarr shows the cost your answer is correct Prepare the sales budget. COOK FAIA udget COMPANY For the Six Months Ending June 30, 2017 Quarter Month: 1 2 Expected unit sales 28600 42800 71400 Unit selling price 61 6 61 T 2610800 Total sales 1744600 4355400 Prepare the production budget. COOK FARM SUPPLY COMPANY Production Budget For the Six Months Ending June 30, 2017 Quarter Six Months 2 28600 42800 Expected Unit Sales Add Desired Ending Finished Goods Units 12300 18200 Total Required Units 40900 61000 Less Beginning Finished Goods Units 8300 12300 T Required Production Units 32600 48700 81300 COOK FARM SUPPLY COMPANY Direct Labor Budget For the Six Months Ending June 30, 2017 Quarter Six Months 1 2 Units to be Produced Direct Labor Time per Unit Total Required Direct Labor Hours Direct Labor Cost per Hour x Total Direct Labor Cost Prepare the selling and administrative expense budget. COOK FARM SUPPLY COMPANY Selling and Administrative Expense Budget x For the Quarter Ending June 30, 2017 Quarter Six Months 1 x X Budgeted sales in units Variable Cost Fixed Cost Total Your answer is partially correct. Try again. 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 For the Six Months Ending June 30, 2017 Sales TCost of Goods Sold Gross Profit Selling and Administrative Expenses Income from Operations Interest Expense Income Before Income Tax Income Tax Expense Net Income/ (Loss)
