P20-1A Danner Farm Supply Company manufactures and sells a pesticide called Snar
ID: 2344665 • Letter: P
Question
P20-1ADanner 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 2011.
Sales: Quarter 1, 28,000 bags; quarter 2, 42,000 bags. Selling price is $60 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 $1.50 per pound.
Desired inventory levels:
Type of Inventory January 1 April 1 July 1
Snare (bags) 8,000 12,000 18,000
Gumm (pounds) 9,000 10,000 13,000
Tarr (pounds) 14,000 20,000 25,000
Direct labor: Direct labor time is 15 minutes per bag at an hourly rate of $14 per hour.
Selling and administrative expenses are expected to be 15% of sales plus $175,000 per quarter.
Income taxes are expected to be 30% of income from operations.
Your assistant has prepared two budgets: (1) The manufacturing overhead budget shows expected costs to be 150% of direct labor cost. (2) The direct materials budget for Tarr shows the cost of Tarr purchases to be $297,000 in quarter 1 and $421,500 in quarter 2.
Complete the budgeted income statement for the first 6 months and all required supporting budgets by quarters. (Note: Use variable and fixed in the selling and administrative expense budget).
DANNER FARM SUPPLY COMPANY
Sales Budget
For the Six Months Ending June 30, 2011
Quarter
Six
1
2
Months
Expected unit sales
Unit selling price
Explanation / Answer
Your question is not complete. However, I am giving you the solution. Zelmer Farm Supply Company Budgeted Income statement For the half year ended June 30, 2012 Quarter 1 2 Total Expected unit sales 28,000 42,000 70,000 Unit selling price 60 60 60 Total Sales 16,80,000 25,20,000 42,00,000 Less: Cost of goods sold Gumm @ $16 per bag 4,48,000 6,72,000 11,20,000 Tarr @ $9 per bag 2,52,000 3,78,000 6,30,000 Direct labor @ $3.5 per bag 98,000 1,47,000 2,45,000 Manufacturing overhead 147000 220500 367500 Total cost of goods sold 9,45,000 14,17,500 23,62,500 Gross Profit 7,35,000 11,02,500 18,37,500 Less: Selling & Administrative expense 4,27,000 5,53,000 9,80,000 Net Income before tax 3,08,000 5,49,500 8,57,500 Less: Income tax 30% 92,400 1,64,850 2,57,250 Net Income after tax 2,15,600 3,84,650 6,00,250 Get homework help More than 200 experts are waiting to help you now... Related Topics income statement or operating statement cost of goods sold (cogs) About Chegg Media Center Chegg For Good Privacy Policy Your CA Privacy Rights Terms of Use General Policies Intellectual Property Rights Resources
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