Problem 23-1A (Part Level Submission) Cook Farm Supply Company manufactures and

Question

Problem 23-1A (Part Level Submission) Cook Farm Supply Company manufactures and sells a pestidide caled Snare. The following data are available for preparing budgets for Snare for the first 2 quarters of 2017 1. Sales: quarter 1, 28,300 bags; quarter 2, 42,500 bags. Selling price is $61 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 $1.75 per pound. 3. Desired inventory levels Type of January April -11 uly1 Snare (bags) Gumm (pounds) Tarr (pounds) 8,400 12,300 18,100 9,200 10,200 13,400 14,500 20,200 25,300 4. Direct labor: direct labor time is 15 minutes per bag at an hourly rate of $14 per hour. 5. Selling and èdministrative expenses are expected to be 15% of sales plus $176,000 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 bo budgets: 2. 1 the manu acturing overhead budget shows expected costs to be 125% of direct labor oost, and 2) the direct materials budget for Tarr shows the cost of Tarr purchases to be 303,000 in quarter 1 and $425 S00 in quarter (Note: Do not prepare the manufacturing overhead budgct or the direct moterials budget for Tarr.) Prepare the sales budget. COOK FARM SUPPLY COMPANY Sales Budget Six Months Expected unit sales Unit selling price Total salcs Prepare the production budget. COOK FARM SUPPLY COHPANY Budget Six Months

Explanation / Answer

Sales Budget For the Six Months Ending June 30, 2017 1 2 Six months Expected unit sales 28300 42500 70800 Unit selling price 61 61 61 Total sales 1726300 2592500 4318800 Production Budget For the Six Months Ending June 30, 2017 1 2 Six months Expected unit sales 28300 42500 Add: Desired Ending Finished Goods Units 12300 18100 Total Required Units 40600 60600 Less:Beginning Finished Goods Units 8400 12300 Required Production Units 32200 48300 80500

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