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Sheridan 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 2022. 1. 2. 3. Sales: quarter 1, 28,200 bags; quarter 2, 42,400 bags. Selling price is $63 per bag. Direct materials: each bag of Snare requires 4 pounds of Gumm at a cost of $4 per pound and 6 pounds of Tarr at $1.75 per pound. Desired inventory levels: Type of Inventory January 1 Snare (bags) Gumm (pounds) Tarr (pounds) 4. 5 6. 7. 8,200 April 1 12,200 July 1 18,100 9,100 10,400 13,300 14,500 20,400 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 $180,000 per quarter. Interest expense is $100,000. Income taxes are expected to be 20% 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 $422.500 in quarter 2. (Note: Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.)

Sheridan 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 2022. 1. 2. 3. Sales: quarter 1, 28,200 bags; quarter 2, 42,400 bags. Selling price is $63 per bag. Direct materials: each bag of Snare requires 4 pounds of Gumm at a cost of $4 per pound and 6 pounds of Tarr at $1.75 per pound. Desired inventory levels: Type of Inventory January 1 Snare (bags) Gumm (pounds) Tarr (pounds) 4. 5 6. 7. 8,200 April 1 12,200 July 1 18,100 9,100 10,400 13,300 14,500 20,400 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 $180,000 per quarter. Interest expense is $100,000. Income taxes are expected to be 20% 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 $422.500 in quarter 2. (Note: Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.)

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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Current Attempt in Progress Sheridan 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 2022. 1. Sales: quarter 1, 28,200 bags; quarter 2, 42,400 bags. Selling price is $63 per bag. Direct materials: each bag of Snare requires 4 pounds of Gumm at a cost of $4 per pound and 6 pounds of Tarr at $1.75 per pound. Desired inventory levels: 2. 3. Type of Inventory January 1 Snare (bags) Gumm (pounds) Tarr (pounds) 4. 5. 6. 7. 8,200 April 1 12,200 July 1 14,500 20,400 18,100 9,100 10,400 13,300 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 $180,000 per quarter. Interest expense is $100,000. Income taxes are expected to be 20% 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 $422,500 in quarter 2. (Note: Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.)
Transcribed Image Text:Current Attempt in Progress Sheridan 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 2022. 1. Sales: quarter 1, 28,200 bags; quarter 2, 42,400 bags. Selling price is $63 per bag. Direct materials: each bag of Snare requires 4 pounds of Gumm at a cost of $4 per pound and 6 pounds of Tarr at $1.75 per pound. Desired inventory levels: 2. 3. Type of Inventory January 1 Snare (bags) Gumm (pounds) Tarr (pounds) 4. 5. 6. 7. 8,200 April 1 12,200 July 1 14,500 20,400 18,100 9,100 10,400 13,300 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 $180,000 per quarter. Interest expense is $100,000. Income taxes are expected to be 20% 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 $422,500 in quarter 2. (Note: Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.)
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.) SHERIDAN FARM SUPPLY COMPANY Budgeted Income Statement $ $ 0
Transcribed Image Text: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.) SHERIDAN FARM SUPPLY COMPANY Budgeted Income Statement $ $ 0
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