Question 2 of 2

Question 2 of 2 Ivanhoe Farm Supply Company manufactures and sells a pesticide called The available foi preparing budgets for Snare for the first 2 quarters of 2020. 1. 2. 3, Sales: quarter 1, 28,400 bags: quarter 2, 42,200 bags. Selling priceis $ 62 per bag. Direct materials: each bag of Snare requires 5 pounds Of Gumm at a Cost Of $ 3.80 per pood 6 pounds of' Tarr at$ 1.50 per pound. Desired inventory levels: Type of Inventory January 1 Snae (bags) Gumm (pounds) Tarr (pounds) 8,500 9,300 14,300 April I 12,300 10,300 20,500 July T 18,100 13;100 25,100 4. 5. 6. 7. Direct labor: direct labor time is 15 minutes per bag at hourly rate of $ 16 per hour. Selling and administrative expenses are expected to be 15% of sales plus $ 176,000 per quarter. Interest expense is $100,000. Income taxes are expected to be 30%of income before income taxes. Your assistant has prepared two budgets: (1) the manufacturing overhed 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 S 427,500 in quarter 2. (Note: Do not prepare the manufacturing overhead budget or the direct materials budget forarr.)