Cook Farm Supply Company manufactures and sells a pesticide called Snare. The fo
ID: 2486566 • Letter: C
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, 29,400 bags; quarter 2, 42,200 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) 8,100 12,200 18,500
Gumm (pounds) 9,300 10,100 13,100
Tarr (pounds) 14,100 20,200 25,200
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 $179,000 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 $301,000 in quarter 1 and $424,500 in quarter 2.
Prepare the sales budget.
COOK FARM SUPPLY COMPANY
Sales Budget
Quarter
Six
Months
1
2
Expected unit sales
Unit selling price
$
$
$
Total sales
$
$
$
Prepare the production budget.
COOK FARM SUPPLY COMPANY
Production Budget
Quarter
Six
Months
1
2
:
:
Prepare the direct materials budget. (Round Cost per pound answers to 2 decimal places, e.g. 52.70.)
COOK FARM SUPPLY COMPANY
Direct Materials Budget—Gumm
Quarter
Six
Months
1
2
:
:
$
$
$
$
$
Prepare the direct labor budget. (Enter Direct labor time per unit in proportion to hours, e.g. for 45 minutes the proportion will be 0.75.)
COOK FARM SUPPLY COMPANY
Direct Labor Budget
Quarter
Six
Months
1
2
$
$
$
$
$
Prepare the selling and administrative expense budget.
COOK FARM SUPPLY COMPANY
Selling and Administrative Expense Budget
Quarter
Six
Months
1
2
$
$
$
$
$
$
Prepare the budgeted multiple-step income statement for the first 6 months. (Round intermediate calculations to 2 decimal places and final answer to 0 decimal places, e.g. 1,255.)
COOK FARM SUPPLY COMPANY
Budgeted Income Statement
$
$
Explanation / Answer
Since, there are multiple parts to the question, the first four have been answered.
________
Part 1)
The sale budget is given as follows:
_________
Part 2)
The production budget is as follows:
_________
Part 3)
The direct materials budget is as follows:
_________
Part 4)
The direct labor budget is given as follows:
COOK FARM SUPPLY COMPANY Sales Budget For the Six Months Ending June 30, 2017 Quarter 1 2 Six Months Expected unit sales 29,400 42,200 71,600 Unit selling price $62 $62 $62 Total sales $1,822,800 $2,616,400 $4,439,200