Cook Farm Supply Company manufactures and sells a pesticide called Snare. The following data are available for
Question:
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, 28,200 bags; quarter 2, 43,600 bags. Selling price is $63 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 $1.75 per pound. | |
3. | Desired inventory levels: |
Type of Inventory | January 1 | April 1 | July 1 | |||
---|---|---|---|---|---|---|
Snare (bags) | 8,100 | 12,100 | 18,100 | |||
Gumm (pounds) | 9,100 | 10,500 | 13,500 | |||
Tarr (pounds) | 14,100 | 20,100 | 25,500 |
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 $177,000 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 $303,000 in quarter 1 and $426,500 in quarter 2.
(Note: Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.)
Prepare the sales budget.
COOK FARM SUPPLY COMPANY Sales Budget choose the accounting period | ||||||
---|---|---|---|---|---|---|
Quarter | Six Months | |||||
1 | 2 | |||||
Expected unit sales | enter a number of units | enter a number of units | enter a number of units | |||
Unit selling price | $enter a dollar amount | $enter a dollar amount | $enter a dollar amount | |||
Total sales | $enter a total dollar amount | $enter a total dollar amount | $enter a total dollar amount |
Prepare the production budget.
COOK FARM SUPPLY COMPANY
Production Budget
choose the accounting period
Quarter
Six
Months
1
2
select an opening production budget item
enter a number of units
enter a number of units
select between addition and deduction: select a production budget item
enter a number of unitsenter a number of units
select a summarizing line for the first part
enter a total number of units for the first part
enter a total number of units for the first part
select between addition and deduction: select a production budget item
enter a number of unitsenter a number of units
select a closing production budget item
enter a total number of unitsenter a total number of unitsenter a total number of units
Financial and Managerial Accounting
ISBN: 978-1119392132
3rd edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso