Oriole 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, 28,400 bags; quarter 2, 44,000 bags. Selling price is $62 per bag.2. Direct materials: each bag of Snare requires 4 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 1Snare (bags) 8,100 12,500 18,300Gumm (pounds) 9,100 10,400 13,100Tarr (pounds) 14,300 20,200 25,400 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 $180,000 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 $301,000 in quarter 1 and $427,500 in quarter 2.(Note: Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.) Prepare the sales budget.ORIOLE FARM SUPPLY COMPANYSales BudgetFor the Six Months Ending June 30, 2020QuarterSix12MonthsExpected Unit SalesUnit Selling PriceTotal Sales$%24%24%24%24%24 Prepare the production budget.ORIOLE FARM SUPPLY COMPANYProduction BudgetFor the Six Months Ending June 30, 2020QuarterExpected Unit SalesAdd +: Desired Ending Finished Goods UnitsTotal Required UnitsLess : Beginning Finished Goods UnitsRequired Production Units

Sales budget is that budget which shows expected sales revenue to be earned by sales of goods.…

Answered: Prepare the sales budget. ORIOLE FARM…

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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Oriole 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, 28,400 bags; quarter 2, 44,000 bags. Selling price is $62 per bag.
2.		Direct materials: each bag of Snare requires 4 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	12,500	18,300
Gumm (pounds)	9,100	10,400	13,100
Tarr (pounds)	14,300	20,200	25,400

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 $180,000 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 $301,000 in quarter 1 and $427,500 in quarter 2.

(Note: Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.)

Prepare the sales budget.
ORIOLE FARM SUPPLY COMPANY
Sales Budget
For the Six Months Ending June 30, 2020
Quarter
Six
1
2
Months
Expected Unit Sales
Unit Selling Price
Total Sales
$
%24
%24
%24
%24
%24

Prepare the production budget.
ORIOLE FARM SUPPLY COMPANY
Production Budget
For the Six Months Ending June 30, 2020
Quarter
Expected Unit Sales
Add +: Desired Ending Finished Goods Units
Total Required Units
Less : Beginning Finished Goods Units
Required Production Units

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