Problem 21-1A (Part Level Submission) Cook Farm Supply Company manufactures and
ID: 2396209 • Letter: P
Question
Problem 21-1A (Part Level Submission) 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 2017 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 $3.8 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) Gumm (pounds) Tarr (pounds) 8,100 9,100 14,300 12,500 10,400 20,200 18,300 13,100 25,400 4. Direct labor: direct labor time is 15 minutes per bag at an hourly rate of $14 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 Your answer is partially correct. Try again Prepare the sales budget COOK FARM SUPPLY COMPANY Sales Budget For the Quarter Ending June 30, 2017 Quarter IX 2 MonthsExplanation / Answer
(a) In sales Budget :-
There is red box – There is need of Six month ending June 30, 2017 instead of For the quarter ending june 30, 2017
In Production Budget :-
There is red box-There is need of Total Finished Goods needs to produced instead of Total pounds need for Production
(b) Direct Materials Budget-Gumm :-
Quarter 1
Quarter 2
Six Month
Total Finished Goods needs to produced
32800
49800
Pound required for 1 unit of Finished goods
4
4
Total Pounds need for Production
(32800 * 4)
=131200
(49800 * 4)
=199200
Add:-Desired Ending Inventory
10400
13100
Total Required Units
141600
212300
Less:- Beginning Inventory Units
-9100
-10400
Total Direct Material need to purchase
132500
201900
Rate per Pound
$ 3.8
$ 3.8
Total cost of Direct Material Purchase
$ 503500
$ 767220
$1270720
(b) Direct Labour Budget :-
Quarter 1
Quarter 2
Six Month
Total Finished Goods needs to produced
32800
49800
Direct Labour hour per unit
0.25
0.25
Total Time required for production (hours)
8200
12450
Rate per Labour hour
$ 14
$ 14
Total cost of Direct Labour
$ 114800
$ 174300
$ 289100
Selling & Admn Exp Budget :-
Quarter 1
Quarter 2
Six Month
Total Sales
1760800
2728000
4488800
Variable Selling & Admn Exp
(1760800 * 15%)
=264120
(2728000 * 15%)
=409200
673320
Add:- Fixed Selling & Admn Exp
180000
180000
360000
Total Selling & Admn Exp
444120
589200
1033320
Quarter 1
Quarter 2
Six Month
Total Finished Goods needs to produced
32800
49800
Pound required for 1 unit of Finished goods
4
4
Total Pounds need for Production
(32800 * 4)
=131200
(49800 * 4)
=199200
Add:-Desired Ending Inventory
10400
13100
Total Required Units
141600
212300
Less:- Beginning Inventory Units
-9100
-10400
Total Direct Material need to purchase
132500
201900
Rate per Pound
$ 3.8
$ 3.8
Total cost of Direct Material Purchase
$ 503500
$ 767220
$1270720
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