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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, 29,800 bags; quarter 2, 42,400 bags. Selling price is $62 per bag. | |
| 2. | Direct materials: each bag of Snare requires 5 pounds of Gumm at a cost of $3.80 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 | 12,100 | 18,100 | |||
| Gumm (pounds) | 9,500 | 10,300 | 13,100 | |||
| Tarr (pounds) | 14,100 | 20,100 | 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 $303,000 in quarter 1 and $422,500 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 |
|||||
|
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 |
|||||
|
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 units | enter 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 units | enter a number of units | ||||
| select a closing production budget item | enter a total number of units | enter a total number of units | enter a total number of units |
eTextbook and Media
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 choose the accounting period |
||||||
|---|---|---|---|---|---|---|
|
Quarter |
Six |
|||||
|
1 |
2 |
|||||
| select an opening direct materials budget item |
enter a number of units |
enter a number of units |
||||
| select an item | enter the amount of pounds | enter the amount of pounds | ||||
| select a summarizing line for the first part | enter a total amount of pounds for the first part | enter a total amount of pounds for the first part | ||||
|
|
enter the amount of pounds | enter the amount of pounds | ||||
| select a summarizing line for the second part | enter a total amount of pounds for the second part | enter a total amount of pounds for the second part | ||||
|
|
enter the amount of pounds | enter the amount of pounds | ||||
| select a summarizing line for the third part | enter a total amount of pounds for the third part | enter a total amount of pounds for the third part | ||||
| select an item | $enter a dollar amount | $enter a dollar amount | ||||
| select a closing direct materials budget item | $enter a total dollar amount | $enter a total dollar amount | $enter a total dollar amount |
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 choose the accounting period |
||||||
|---|---|---|---|---|---|---|
|
Quarter |
Six |
|||||
|
1 |
2 |
|||||
| select an opening labor budget item |
enter a number of units |
enter a number of units |
||||
| select a labor budget item | enter a number of hours | enter a number of hours | ||||
| select a summarizing line for the first part |
enter a total number of hours for the first part |
enter a total number of hours for the first part |
||||
| select a labor budget item | $enter a dollar amount | $enter a dollar amount | ||||
| select a closing labor budget item | $enter a total dollar amount | $enter a total dollar amount | $enter a total dollar amount |
Prepare the selling and administrative expense budget.
| COOK FARM SUPPLY COMPANY Selling and Administrative Expense Budget choose the accounting period |
||||||
|---|---|---|---|---|---|---|
|
Quarter |
Six |
|||||
|
1 |
2 |
|||||
| select an item | enter a total number of units | enter a total number of units | enter a total number of units | |||
| select an item |
$enter a dollar amount |
$enter a dollar amount |
$enter a dollar amount |
|||
| select an item | enter a dollar amount | enter a dollar amount | enter a dollar amount | |||
| select a closing budget item | $enter a total dollar amount | $enter a total dollar amount | $enter a total dollar amount |
eTextbook and Media
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 choose the accounting period |
||
|---|---|---|
| select an income statement item |
$enter a dollar amount |
|
| select an income statement item | enter a dollar amount | |
| select a summarizing line for the first part |
enter a total amount for the first part |
|
| select an income statement item | enter a dollar amount | |
| select a summarizing line for the second part |
enter a total amount for the second part |
|
| select an income statement item | enter a dollar amount | |
| select a summarizing line for the third part |
enter a total amount for the third part |
|
| select an income statement item | enter a dollar amount | |
| select a closing name for the budgeted income statement | $enter a total net income or loss amount |
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