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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, 28,600 bags; quarter 2, 43,400 bags. Selling price is $62 per bag 2. Direct materials: each bag of Snare requires 5 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 Type of Inventory January 1 July 1 April 1 8,400 9,400 14,300 12,300 10,500 20,400 Snare (bags) Gumm (pounds) Tarr (pounds) 18,300 13,500 25,100 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 $299,000 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 Quarter Six Months 2 Expected Unit Sales 72000 28600 43400 62 62 62 Unit Selling Price 1773200 2690800 4464000 Total Sales Prepare the production budget. COOK FARM SUPPLY COMPANY Production Budget For the Six Months Ending June 30, 2020 Quarter Six Months 1 2 2040340 43400 Expected Unit Sales Add Desired Ending Finished Goods Units Total Required Units Less Beginning Finished Goods Units 28600 12300 18300 61700 40900 -12300 -8400 3250049400 8,900 81900 Required Production Units COOK FARM SUPPLY COMPANY Direct Materials Budget Gumm For the Six Months Ending June 30, 2020 Quarter Six Months 1 2 Total Required Units 32,500 49,400 5 Units to be Produced Direct Labor Time (Hours) per Unit 162500 247000 Desired Ending Finished Goods Units 10500 13500 173000 260500 Total Materials Required 9400 10500 Less Beginning Direct Materials (Pounds) 163600 Direct Materials Purchases 250000 3.80 3.80 Cost per Pound 621680 950000 1571680 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 minu COOK FARM SUPPLY COMPANY Direct Labor Budget For the Six Months Ending June 30, 2020 Quarter Six Months 1 2 49400 32500 Total Required Units 15 15 Direct Labor Cost per Hour Direct Labor Time (Hours) per Unit 0.25 0.25 8125 12350 Total Required Direct Labor Hours 3,27,600 1,30,000 1,97,600 Total Direct Labor Cost

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