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, 29,400 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 Tarr at $1.50 per pound.
3.		Desired inventory levels:

Type of Inventory		January 1		April 1		July 1
Snare (bags)		8,500		12,200		18,500
Gumm (pounds)		9,300		10,400		13,100
Tarr (pounds)		14,400		20,500		25,300

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 $176,000 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 $298,000 in quarter 1 and $423,500 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 29400 42400 T 71800 T Unit Selling Price , 63 T Total Sales - 26712001 4523400 Prepare the production budget. COOK FARM SUPPLY COMPANY Production Budget For the Six Months Ending June 30, 2020 Quarter Six Months 2 T Expected Unit Sales 42400 UUS T Desired Ending Finished Goods Units | 12200 18500 600 60900 Total Required Units Less . Beginni Beginning Finished Goods Units 8500 12200 Required Production Units 48700 81800 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 2 Units to be produced 48700 T Direct Materials per Unit T Total Pounds Needed for Production 132400 T 194800 Desired Ending Direct Materials (Pounds) - 10400 13100 Total Materials Required 142800 207900 Beginning Direct Materials (Pounds) - 9300 T 10400 Direct Materials Purchases 133500 T 197500 T Cost per Pound 3.80 3.80 T Total Cost of Direct Materials Purchases 507300 750500 J 1257800 Prepare the direct labor budget. (Enter Direct labor time per unit in proportion to hours, e.g. for 45 minut COOK FARM SUPPLY COMPANY Direct Labor Budget For the Six Months Ending June 30, 2020 Quarter 1 2 Six Months T Units to be produced 33100 T. 48700 TDirect Labor Time (Hours) per Unit 25 T Total Required Direct Labor Hours 8275 12175 T Direct Labor Cost per Hour 16 T Total Direct Labor Cost 194800] 327200 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 2 Sales $ 1,852,200 $ 2,671,200 s 4,523,400 Variable Expenses $ 277,830 $ 400,680 678,510 Fixed Expenses 176,000 176,000 352,000 Total Selling and Administrative Expenses 453,830 $ 576,680 $ 1,030,510 (C) Prepare the budgeted multiple-step income statement for the first 6 months.( answer to o decimal places, e.g. 1,255.) COOK FARM SUPPLY COMPANY Budgeted Income Statement For the Six Months Ending June 30, 2020 Sales $ 4523400 Cost of Goods Sold Gross Profit Selling and Administrative Expenses 1030510 Income from Operations Interest Expense Interest Expense Income Before Income Tax Income Tax Expense