Just need to know how to get the values for the budgeted income statement Proble

Question

Just need to know how to get the values for the budgeted income statement

Problem 23-1A (Part Level Submission) Glendo 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 2014 1. Sales: Quarter 1, 29,100 bags; quarter 2, 43,000 bags. Selling price is $61 per bag 2. Direct materials: Each bag of Snare requires 4 pounds of Gumm at a cost of $4 per pound and 8 pounds of Tarr at $1.50 per pound 3. Desired inventory levels: e of Inventor January 1 July 1 Snare (bags) Gumm (pounds) Tarr (pounds) 8,200 9,400 14,300 12,400 10,500 20,200 18,400 13,500 25,300 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 $178,000 per quarter 6. 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 $302,000 in quarter 1 and $425,000 in quarter 2.

Explanation / Answer

Sales          4,398,100 Cost of goods sold(72100*36.75)          2,649,675 Gross Profit          1,748,425 Selling and administrative          1,015,715 Income from operations              732,710 Income tax expenses              219,813 Net income(loss)              512,897 Cost of goods sold (4 pounds x $4.00 = $16.00 8 pounds x $1.50 = $12.00 1/4 hour x $14.00 = 3.50 150% of direct labor cost 5.25 Total $36.75)

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