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, 28,200 bags; quarter 2, 43,600 bags. Selling price is $63 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 $1.75 per pound.3.Desired inventory levels:
Type of InventoryJanuary 1April 1July 1Snare (bags)8,10012,10018,100Gumm (pounds)9,10010,50013,500Tarr (pounds)14,10020,10025,500
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 $177,000 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 $426,500 in quarter 2.
(Note: Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.)
Prepare the sales budget.
COOK FARM SUPPLY COMPANY
Sales Budget
choose the accounting period QuarterSix
Months12Expected unit salesenter a number of units enter a number of units enter a number of units Unit selling price$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 QuarterSix
Months12select 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
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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 QuarterSix
Months12select 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 select between addition and deduction : select an item 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 select between addition and deduction : select an item 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 QuarterSix
Months12select 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 QuarterSix
Months12select 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
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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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