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 1 $ $ COOK FARM SUPPLY COMPANY Direct Labor Budget Quarter 1 2 Quarter $ 2 Six Months
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 1 $ $ COOK FARM SUPPLY COMPANY Direct Labor Budget Quarter 1 2 Quarter $ 2 Six Months
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text:Prepare the direct materials budget. (Round Cost per pound answers to 2 decimal places, e.g. 52.70.)
>
$
$
Prepare the selling and administrative expense budget.
$
$
$
COOK FARM SUPPLY COMPANY
Direct Materials Budget-Gumm
$
COOK FARM SUPPLY COMPANY
Direct Labor Budget
1
$
Quarter
$
COOK FARM SUPPLY COMPANY
Selling and Administrative Expense Budget
$
Quarter
$
$
1
$
2
2
Quarter
$
$
$
$
$
$
2
Six
Months
Six
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, 29,800 bags; quarter 2, 42,400 bags. Selling price is $62 per bag.
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:
1.
2.
Type of Inventory January 1
Snare (bags)
Gumm (pounds)
Tarr (pounds)
4.
5.
6.
April 1
July 1
8,100
12,100
18,100
9,500 10,300 13,100
14,100 20,100
7.
25,200
Direct labor: direct labor time is 15 minutes per bag at an hourly rate of $16 per hour.
Selling and administrative expenses are expected to be 15% of sales plus $179,000 per quarter.
Interest expense is $100,000.
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.)
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