Problem 23-1A Cook Farm Supply Company manufactures and sels a pesticide called

Question

Problem 23-1A Cook Farm Supply Company manufactures and sels a pesticide called Snare.The folewing date are availiable for preparing budgets for Shnare for the fst 2 quarters of 2017 1 Sales: querter 1, 28,400 bgs quarter 2,42,200 bags, Seling price is $62 per bag 2. Direct materas each bag or snar·mqures 5 pounds of Gm" at 10st o' sia per pound Desired 6 rds on" z s1.50 per pond Snare (bags) Gumm tseunds) Tare (pounes) 500 12,300 18,100 .3000.300 13,100 4,30020,300 25,100 · Income taxes are expected to be 30% of inené before intone tam. ro-assistant has prepared two bmets: (1) the mandacturng-enead budget shows expected costs " be 125%-arEt labor cont, and (2) the dit munn bdget- .ow,"o-a, br New b. b in quarter 1 (Note: De not prepare the manufactuning overhead budget or the direct materials budget for Ta

Explanation / Answer

Cook farm Supply Company Sales Budget For the Six Months Ending June 30, 2017 Quarter Six 1 2 Months Expected unit sales 28,400 42,200 70,600 Unit selling price $62 $62 $62 Total sales $1,760,800 $2,616,400 $4,377,200 Cook farm Supply Company Production Budget For the Six Months Ending June 30, 2017 Quarter Six 1 2 Months Expected unit sales 28,400 42,200 70,600 Add: Desired ending finished goods units 12,300 18,100 18,100 Total required units 40,700 60,300 88,700 Less: Beginning finished goods units 8,500 12,300 8,500 Required production units 32,200 48,000 80,200 Cook farm Supply Company Cook farm Supply Company Direct Materials Budget - Gumm Direct Materials Budget - Tarr For the Six Months Ending June 30, 2017 For the Six Months Ending June 30, 2017 Quarter Six Quarter Six 1 2 Months 1 2 Months Units to be produced 32,200 48,000 80,200 Units to be produced 32,200 48,000 80,200 Direct materials per unit (pounds) 5 5 5 Direct materials per unit (pounds) 6 6 6 Total pounds needed for production 161,000 240,000 401000 Total pounds needed for production 193,200 288,000 481200 Add: Desired ending direct materials (pounds) 10,300 13,100 13,100 Add: Desired ending direct materials (pounds) 20,500 25,100 25,100 Total materials required 171,300 253,100 414,100 Total materials required 213,700 313,100 506,300 Less: Beginning direct materials (pounds) 9,300 10,300 9,300 Less: Beginning direct materials (pounds) 14,300 20,500 14,300 Direct materials purchases 162,000 242,800 404,800 Direct materials purchases 199,400 292,600 492,000 Cost per pound 3.8 3.8 3.8 Cost per pound 1.5 1.5 1.5 Total cost of direct materials purchases $615,600 $922,640 $1,538,240 Total cost of direct materials purchases $299,100 $438,900 $738,000 Cook farm Supply Company Direct Labor Budget For the Six Months Ending June 30, 2017 Quarter Six 1 2 Months Units to be produced 32,200 48,000 80,200 Direct labor hours per unit 0.25 0.25 0.25 Total required direct labor hours 8,050 12,000 20,050 Direct labor cost per hour 14 14 14 Total direct labor cost $112,700 $168,000 $280,700 Cook farm Supply Company Selling and Administrative Budget For the Six Months Ending June 30, 2017 Quarter Six 1 2 Months Budgeted sales 1,760,800 2,616,400 4,377,200 Variable (.15 x sales) $                 264,120 $   392,460 $   656,580 Fixed                     136,000       136,000       136,000 Total $                 400,120 $   528,460 $   792,580 Cook farm Supply Company Budgeted Income Statement For the Six Months Ending June 30, 2017 Sales revenue $              4,377,200 Cost of goods sold 72,200*32.725)                  2,362,745 Gross Profit                  2,014,455 Selling and administrative expenses                     792,580 Income from operations                  1,221,875 Interest                     100,000 Income after interest                  1,121,875 Income tax expense (30%)                     336,563 Net income $                 785,313 Direct material 5*3.8 +6* 1.5= 28 Direct labour .15*14 = 2.1 Manufacturing overhead = 125% of 2.1 = 2.625 2.625 Cost per unit 32.725

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