Smith Supply Company manufactures and sells a pesticide called 3 pacitos. The following data are available for preparing budgets for 3 pacitos for the first 2 quarters of 2009. 1. Sales: Quarter 1 Quarter 2 Sales in Units 28,000 42,000 Selling price per bag. $60 2. Direct materials: Each bag of 3 pacitos requires 4 lbs. of Gunm at a cost of $4.00 per pound 6 lbs. of Tahr at a cost of $1.50 Per pound. 3. Desired inventory levels: 1-Jan 1-Apr 1-Jul 3 pacitos (bags) goods 8,000 12,000 18,000 Gunm (lbs) Dir Mat 9,000 10,000 13,000 Tahr (lbs) Dir Mat 14,000 20,000 25,000 4. Direct labor: Direct labor time is, per bag 0.25 hours (15 minutes) at an hourly rate of $14.00 per hour. 5. Selling and administrative expenses are expected to be 15% of sales plus $175,000 Per quarter. 6. Income taxes are expected to be 30% of income from operations. 7. The manufacturing overhead budget shows expected costs to be of direct labor cost. 150%.

Instructions:
6-Cost of Goods Sold