Cook Farm Supply Company manufactures and sells a pesticide called Snare. The fo

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 2017.

1. Sales: quarter 1, 29,800 bags; quarter 2, 42,400 bags. Selling price is $62 per bag.

2. Direct materials: each bag of Snare requires 4 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:

4. Direct labor: direct labor time is 15 minutes per bag at an hourly rate of $14 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 $300,000 in quarter 1 and $426,500 in quarter 2

Type of Inventory January 1 April 1 July 1 Snare (bags) 8,300 12,400 18,100 Gumm(pounds) 9,300 10,500 13,300 Tarr (pounds) 14,300 20,400 25,400

Explanation / Answer

sorry question is incomplete what is the required to prepare is not given in the question. please mention the required part to be answered.

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