Problem P9-1A Q4- Glendo 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 2014. 1. Sales: Quarter 1, 25,000 bags; Quarter 2, 40,000 bags. Selling price is $50.00 per bag. -2. Direct materials: Each bag of Snare requires 5 pounds of Gumm at a cost of $4.00 per pound and 5 pounds of Tarr at $2.00 per pound. 3. Desired inventory levels: Type of inventory Snare (bags) Gumm (pounds) Tarr (pounds) January 1 7,000 10,000 15,000 April 1 15,000 10,000 20,000 July 1 20,000 15,000 25,000 4. Direct labor: Direct labor time is 0.25 hours (15 minutes) per bag at an hourly rate of $20.00 per hour. 5. Selling and administrative expenses are expected to be 15% of sales plus $200,000 per quarter. 6. Income taxes are expected to be 25% of income from operations. Your assistant has prepared two budgets: (1) The manufacturing overhead budget shows expected costs to be 150% of direct labor cost. (2) The direct materials budget for Tarr shows that cost of Tarr purchases to be $300,000 in quarter 1 and $450,000 in quarter 2. Instructions: Prepare the budgeted income statement for the first 6 months and all required operating budgets by quarters. (Note: Use variable and fixed in the selling and administrative expense budget.) Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.

Problem P9-1A Q4- Glendo 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 2014. 1. Sales: Quarter 1, 25,000 bags; Quarter 2,40,000 bags. Selling price is $50.00 per bag. 2. Direct materials: Each bag of Snare requires 5 pounds of Gumm at a cost of $4.00 per pound and 5 pounds of Tarr at $2.00 per pound. 3. Desired inventory levels: 4. Direct labor: Direct labor time is 0.25 hours ( 15 minutes) per bag at an hourly rate of $20.00 per hour. 5. Selling and administrative expenses are expected to be 15% of sales plus $200,000 per quarter. 6. Income taxes are expected to be 25% of income from operations. Your assistant has prepared two budgets: (1) The manufacturing overhead budget shows expected costs to be 150% of direct labor cost. (2) The direct materials budget for Tarr shows that cost of Tarr purchases to be $300,000 in quarter 1 and $450,000 in quarter 2. Instructions: Prepare the budgeted income statement for the first 6 months and all required operating budgets by quarters. (Note: Use variable and fixed in the selling and administrative expense budget.) Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr. ACCT212-Mod05-Ch09 Classwork 08-Page 6 of 9 \begin{tabular}{|l|l|} \hline \multicolumn{2}{|c|}{ GLENDO FARM SUPPLY COMPANY } \\ \hline \multicolumn{1}{|c|}{ Budgeted Income Statement } \\ \hline \multicolumn{1}{|c|}{ For the Six Months Ending June 30, 2014 } \\ \hline & \multirow{2}{|c|}{6 Months } \\ \hline Sales & \\ \hline Cost of goods sold & \\ \hline Gross profit & \\ \hline Selling and administrative expenses & \\ \hline Income from operations & \\ \hline Income tax expense & \\ \hline Net income \\ \hline \end{tabular} \begin{tabular}{|l|l|l|l|} \hline Cost element & Quantity & Unit Cost & Total \\ \hline Direct materials & & & \\ \hline Gumm (lbs.) & & & \\ \hline Tarr (lbs.) & & & \\ \hline Direct labor (hrs.) & & & \\ \hline Manufacturing overhead & & \\ \hline Total & & \\ \hline \end{tabular}