Problem 9-1A (Part Level Submission) Type of Inventory January 1 April 1 July 1
ID: 2437410 • Letter: P
Question
Problem 9-1A (Part Level Submission)
Type of Inventory
January 1
April 1
July 1
(a)
Quarter
Six
Months
1
2
Quarter
Six
Months
1
2
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(b)
The parts of this question must be completed in order. This part will be available when you complete the part above.
(c)
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Problem 9-1A (Part Level Submission)
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 2017.1. Sales: quarter 1, 28,600 bags; quarter 2, 43,400 bags. Selling price is $62 per bag. 2. Direct materials: each bag of Snare requires 5 pounds of Gumm at a cost of $3.8 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) 8,400 12,300 18,300 Gumm (pounds) 9,400 10,500 13,500 Tarr (pounds) 14,300 20,400 25,100 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 $178,000 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 $299,000 in quarter 1 and $426,500 in quarter 2.
(Note: Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.)
(a)
Prepare the sales budget.COOK FARM SUPPLY COMPANY
Sales Budget
June 30, 2017For the Six Months Ending June 30, 2017For the Quarter Ending June 30, 2017
Quarter
Six
Months
1
2
Expected unit sales Unit selling price $ $ $ Total sales $ $ $Prepare the production budget.
COOK FARM SUPPLY COMPANY
Production Budget
For the Quarter Ending June 30, 2017For the Six Months Ending June 30, 2017June 30, 2017
Quarter
Six
Months
1
2
Cost per PoundTotal Direct Labor CostTotal Materials RequiredDirect Labor Time per UnitDirect Materials PurchasesTotal Cost of Direct Materials PurchasesDirect Labor Cost per HourTotal Required Direct Labor HoursTotal Pounds Needed for ProductionDirect Materials per UnitBeginning Direct MaterialsExpected Unit SalesRequired Production UnitsBeginning Finished Goods UnitsDesired Ending Finished Goods UnitsTotal Required UnitsDesired Ending Direct Materials
AddLess
:Cost per PoundBeginning Finished Goods UnitsRequired Production UnitsTotal Pounds Needed for ProductionBeginning Direct MaterialsTotal Required Direct Labor HoursDirect Labor Time per UnitExpected Unit SalesTotal Required UnitsDirect Materials per UnitDirect Materials PurchasesDesired Ending Direct MaterialsTotal Cost of Direct Materials PurchasesDesired Ending Finished Goods UnitsDirect Labor Cost per HourTotal Direct Labor CostTotal Materials Required
Beginning Direct MaterialsDirect Materials per UnitDirect Labor Cost per HourCost per PoundDesired Ending Direct MaterialsDirect Materials PurchasesDesired Ending Finished Goods UnitsBeginning Finished Goods UnitsExpected Unit SalesRequired Production UnitsTotal Materials RequiredTotal Required Direct Labor HoursTotal Cost of Direct Materials PurchasesTotal Direct Labor CostTotal Pounds Needed for ProductionDirect Labor Time per UnitTotal Required Units
AddLess
:Direct Labor Cost per HourTotal Materials RequiredBeginning Direct MaterialsTotal Pounds Needed for ProductionCost per PoundTotal Required Direct Labor HoursDirect Labor Time per UnitBeginning Finished Goods UnitsTotal Required UnitsDirect Materials per UnitExpected Unit SalesDirect Materials PurchasesRequired Production UnitsDesired Ending Direct MaterialsDesired Ending Finished Goods UnitsTotal Cost of Direct Materials PurchasesTotal Direct Labor Cost
Direct Labor Time per UnitTotal Direct Labor CostCost per PoundTotal Required Direct Labor HoursDirect Materials per UnitDirect Labor Cost per HourDesired Ending Finished Goods UnitsTotal Required UnitsTotal Pounds Needed for ProductionBeginning Direct MaterialsExpected Unit SalesBeginning Finished Goods UnitsRequired Production UnitsDirect Materials PurchasesDesired Ending Direct MaterialsTotal Cost of Direct Materials PurchasesTotal Materials Required
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(b)
The parts of this question must be completed in order. This part will be available when you complete the part above.
(c)
The parts of this question must be completed in order. This part will be available when you complete the part above.
Explanation / Answer
Sales Budget :-
Quarter 1
Quarter 2
Six Months
Expected Unit Sales (bags) (a)
28600
43400
72000
Unit Selling Price ($) (b)
62
62
62
Total Sales ($) (a * b)
1773200
2690800
4464000
Production Budget :-
Quarter 1
Quarter 2
Six Months
Expected Unit Sales (bags)
28600
43400
72000
Add:- Desired Ending Finished Goods
12300
18300
30600
Total Required Units
40900
61700
102600
Less:- Beginning Finished Goods units
8400
12300
20700
Required Production Units
32500
49400
81900
Quarter 1
Quarter 2
Six Months
Expected Unit Sales (bags) (a)
28600
43400
72000
Unit Selling Price ($) (b)
62
62
62
Total Sales ($) (a * b)
1773200
2690800
4464000