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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. Sales: quarter 1, 28,600 bags; quarter 2, 42,800 bags. Selling price is $63 per bag. Direct materials: each bag of Snare requires 5 pounds of Gumm at acost of $3.80 per pound and 6 pounds of Tarr at $1.50 per pound. 1. 2. 3. Desired inventory levels: Type of Inventory January 1 April 1 July 1 Snare (bags) Gumm (pounds) Tarr (pounds) 8,100 12,100 18,200 9,300 10,300 13,400 14,300 20,400 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 $177,000 per quarter. 6. Interest expense is $100,000. 7. Income taxes are expected to be 30% of income before incometaxes. 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 $299,000 in quarter 1 and $427,500 in quarter 2. (Note: Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.) Preparethe sales budget. COOK FARM SUPPLY COMPANY Sales Budget Quarter Six 1. 2 Months 2$ $ $ $ $ $ Preparethe production budget. COOK FARM SUPPLY COMPANY Production Budget Quarter Six 1 2 Months

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. Sales: quarter 1, 28,600 bags; quarter 2, 42,800 bags. Selling price is $63 per bag. Direct materials: each bag of Snare requires 5 pounds of Gumm at acost of $3.80 per pound and 6 pounds of Tarr at $1.50 per pound. 1. 2. 3. Desired inventory levels: Type of Inventory January 1 April 1 July 1 Snare (bags) Gumm (pounds) Tarr (pounds) 8,100 12,100 18,200 9,300 10,300 13,400 14,300 20,400 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 $177,000 per quarter. 6. Interest expense is $100,000. 7. Income taxes are expected to be 30% of income before incometaxes. 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 $299,000 in quarter 1 and $427,500 in quarter 2. (Note: Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.) Preparethe sales budget. COOK FARM SUPPLY COMPANY Sales Budget Quarter Six 1. 2 Months 2$ $ $ $ $ $ Preparethe production budget. COOK FARM SUPPLY COMPANY Production Budget Quarter Six 1 2 Months

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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. Sales: quarter 1, 28,600 bags; quarter 2, 42,800 bags. Selling price is $63 per bag. Direct materials: each bag of Snare requires 5 pounds of Gumm at acost of $3.80 per pound and 6 pounds of Tarr at $1.50 per pound. 1. 2. 3. Desired inventory levels: Type of Inventory January 1 April 1 July 1 Snare (bags) Gumm (pounds) Tarr (pounds) 8,100 12,100 18,200 9,300 10,300 13,400 14,300 20,400 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 $177,000 per quarter. 6. Interest expense is $100,000. 7. Income taxes are expected to be 30% of income before incometaxes. 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 $299,000 in quarter 1 and $427,500 in quarter 2. (Note: Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.) Preparethe sales budget. COOK FARM SUPPLY COMPANY Sales Budget Quarter Six 1. 2 Months 2$ $ $ $ $ $ Preparethe production budget. COOK FARM SUPPLY COMPANY Production Budget Quarter Six 1 2 Months
Transcribed Image Text: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. Sales: quarter 1, 28,600 bags; quarter 2, 42,800 bags. Selling price is $63 per bag. Direct materials: each bag of Snare requires 5 pounds of Gumm at acost of $3.80 per pound and 6 pounds of Tarr at $1.50 per pound. 1. 2. 3. Desired inventory levels: Type of Inventory January 1 April 1 July 1 Snare (bags) Gumm (pounds) Tarr (pounds) 8,100 12,100 18,200 9,300 10,300 13,400 14,300 20,400 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 $177,000 per quarter. 6. Interest expense is $100,000. 7. Income taxes are expected to be 30% of income before incometaxes. 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 $299,000 in quarter 1 and $427,500 in quarter 2. (Note: Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.) Preparethe sales budget. COOK FARM SUPPLY COMPANY Sales Budget Quarter Six 1. 2 Months 2$ $ $ $ $ $ Preparethe production budget. COOK FARM SUPPLY COMPANY Production Budget Quarter Six 1 2 Months
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