Cook Farm quarters of 2017 res a budgets for Snare for the frst 2 1. Sales: quar
ID: 2582805 • Letter: C
Question
Cook Farm quarters of 2017 res a budgets for Snare for the frst 2 1. Sales: quarter 1, 29,100 bags; quarter 2, 42,200 bags. Selling price is $63 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: Snare (bags) Gumm (pounds) Tarr (pounds) 9,300 10,30013,200 14,500 20,300 25,300 4. Direct labor: direct labor time is 15 minutes per bag at an hourly rate of $16 per hour S. 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 $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) (a) MacBook AExplanation / Answer
Cook Farm supply Company
Sales budget
For the six months ending june 30 2017
Quarter
Six
1
2
Months
Expected unit sales
29100
42200
71300
Unit selling price
63
63
63
1833300
2658600
4491900
Cook Farm supply Company
Production Budget
For the six months ending june 30 2017
Quarter
Six
1
2
Months
Expected unit sales
29100
42200
71300
Add: Desired ending inventory
12200
18400
30600
Total required units
41300
60600
101900
Less: Desired closing inventory
-8200
-12200
-20400
Required production units
33100
48400
81500
Cook Farm supply company
Direct Materials Budget - GUMM
For the six months ending june 30 2017
Quarter
Six
1
2
Months
Units to be produced
33100
48400
Direct materials per unit
5
5
Total pounds needed for production
165500
242000
407500
Add: Desired ending direct Materials
10300
13200
Total material required
175800
255200
431000
Less: Beginning Direct Materials
-9300
-10300
Direct Material purchases
166500
244900
Cost per pound
3.8
3.8
Total cost of Direct Materials Purchases
632700
930620
1563320
Cook Farm supply company
Direct Materials Budget - Tarr
For the six months ending june 30 2017
Quarter
Six
1
2
Months
Units to be produced
33100
48400
Direct materials per unit
6
6
Total pounds needed for production
198600
290400
489000
Add: Desired ending direct Materials
20300
25300
Total material required
218900
315700
534600
Less: Beginning Direct Materials
-14500
-20300
Direct Material purchases
204400
295400
Cost per pound
1.5
1.5
Total cost of Direct Materials Purchases
306600
443100
749700
Cook Farm supply Company
Sales budget
For the six months ending june 30 2017
Quarter
Six
1
2
Months
Expected unit sales
29100
42200
71300
Unit selling price
63
63
63
1833300
2658600
4491900
Cook Farm supply Company
Production Budget
For the six months ending june 30 2017
Quarter
Six
1
2
Months
Expected unit sales
29100
42200
71300
Add: Desired ending inventory
12200
18400
30600
Total required units
41300
60600
101900
Less: Desired closing inventory
-8200
-12200
-20400
Required production units
33100
48400
81500
Cook Farm supply company
Direct Materials Budget - GUMM
For the six months ending june 30 2017
Quarter
Six
1
2
Months
Units to be produced
33100
48400
Direct materials per unit
5
5
Total pounds needed for production
165500
242000
407500
Add: Desired ending direct Materials
10300
13200
Total material required
175800
255200
431000
Less: Beginning Direct Materials
-9300
-10300
Direct Material purchases
166500
244900
Cost per pound
3.8
3.8
Total cost of Direct Materials Purchases
632700
930620
1563320
Cook Farm supply company
Direct Materials Budget - Tarr
For the six months ending june 30 2017
Quarter
Six
1
2
Months
Units to be produced
33100
48400
Direct materials per unit
6
6
Total pounds needed for production
198600
290400
489000
Add: Desired ending direct Materials
20300
25300
Total material required
218900
315700
534600
Less: Beginning Direct Materials
-14500
-20300
Direct Material purchases
204400
295400
Cost per pound
1.5
1.5
Total cost of Direct Materials Purchases
306600
443100
749700