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Problem 24-01A a-c (Part Level Submission) (Video) Cook Farm Supply Company manufactures and sells a pesticide called Snare. The following data are available for preparing

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Problem 24-01A a-c (Part Level Submission) (Video) 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, 29,800 bags; quarter 2, 42,400 bags. Selling price is $62 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 Tarr at $1.50 per pound. 3. Desired inventory levels: January 1 April 1 Type of Inventory Snare (bags) Gumm (pounds) Tarr (pounds) 8,300 9,300 14,300 12,400 10,500 20,400 July 1 18,100 13,300 25,400 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 $178,000 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 $300,000 in quarter 1 and $426,500 in quarter 2. (Note: Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.) (a) Your answer is correct. Prepare the sales budget. COOK FARM SUPPLY COMPANY Sales Budget For the Six Months Ending June 30, 2020 v Quarter Six Months 1 2 Expected Unit Sales v 29800 42400 72200 Unit Selling Price 62 62 62 $ Total Sales 1847600 2628800 4476400 Prepare the production budget. COOK FARM SUPPLY COMPANY Production Budget For the Six Months Ending June 30, 2020 Quarter Six Months 1 2 Expected Unit Sales 29800 42400 Add Desired Ending Finished Goods Units 12400 18100 Total Required Units 42200 60500 Less Beginning Finished Goods Units 8300 12400 Required Production Units 33900 48100 82000 (b) Your answer is correct. 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, 2020 Quarter Six Months 1 2 Units to be produced 33900 48100 Direct Materials per Unit 4 4 Total Pounds Needed for Production 135600 192400 Add Desired Ending Direct Materials (Pounds) 10500 13300 Total Materials Required 146100 205700 Less Beginning Direct Materials (Pounds) 9300 10500 Direct Materials Purchases 136800 195200 Cost per Pound 3.80 3.80 $ Total Cost of Direct Materials Purchases 519840 741760 1261600 $ 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 Months 1 2 Units to be Produced 33900 48100 M Direct Labor Time (Hours) per Unit 0.25 0.25 F Total Required Direct Labor Hours 8475 12025 Direct Labor Cost per Hour V 16 16 $ Total Direct Labor Cost 135600 192400 328000 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 Six Months 1 2 Sales 1847600 2628800 4476400 Variable Expenses 277140 394320 671460 Fixed Expenses 178000 178000 356000 Total Selling and Administrative Expenses 455140 572320 1027460 $ (c) 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, 2020 Sales > Cost of Goods Sold Income Tax Expense Net Income / (Loss)

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