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 2020. Sales: quarter 1, 28,600 bags; quarter 2, 42,800 bags. Selling price is $63 per bag. Direct materials: each bag of Snare requires 5 pounds of Gumm at acost of $3.80 per pound and 6 pounds of Tarr at $1.50 per pound. 1. 2. 3. Desired inventory levels: Type of Inventory January 1 April 1 July 1 Snare (bags) Gumm (pounds) Tarr (pounds) 8,100 12,100 18,200 9,300 10,300 13,400 14,300 20,400 25,200 4. Direct labor: direct labor time is 15 minutes per bag at an hourly rate of $16 per hour. 5. Selling and administrative expenses are expected to be 15% of sales plus $177,000 per quarter. 6. Interest expense is $100,000. 7. Income taxes are expected to be 30% of income before incometaxes. 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 $299,000 in quarter 1 and $427,500 in quarter 2. (Note: Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.) Preparethe sales budget. COOK FARM SUPPLY COMPANY Sales Budget Quarter Six 1. 2 Months 2$ $ $ $ $ $ Preparethe production budget. COOK FARM SUPPLY COMPANY Production Budget Quarter Six 1 2 Months
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 2020. Sales: quarter 1, 28,600 bags; quarter 2, 42,800 bags. Selling price is $63 per bag. Direct materials: each bag of Snare requires 5 pounds of Gumm at acost of $3.80 per pound and 6 pounds of Tarr at $1.50 per pound. 1. 2. 3. Desired inventory levels: Type of Inventory January 1 April 1 July 1 Snare (bags) Gumm (pounds) Tarr (pounds) 8,100 12,100 18,200 9,300 10,300 13,400 14,300 20,400 25,200 4. Direct labor: direct labor time is 15 minutes per bag at an hourly rate of $16 per hour. 5. Selling and administrative expenses are expected to be 15% of sales plus $177,000 per quarter. 6. Interest expense is $100,000. 7. Income taxes are expected to be 30% of income before incometaxes. 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 $299,000 in quarter 1 and $427,500 in quarter 2. (Note: Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.) Preparethe sales budget. COOK FARM SUPPLY COMPANY Sales Budget Quarter Six 1. 2 Months 2$ $ $ $ $ $ Preparethe production budget. COOK FARM SUPPLY COMPANY Production Budget Quarter Six 1 2 Months
Chapter7: Budgeting
Section: Chapter Questions
Problem 5EB: Cloud Shoes manufactures recovery sandals and is planning on producing 12.000 units in March and...
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text: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 2020.
Sales: quarter 1, 28,600 bags; quarter 2, 42,800 bags. Selling price is $63 per bag.
Direct materials: each bag of Snare requires 5 pounds of Gumm at acost of $3.80 per pound and 6 pounds of Tarr at
$1.50 per pound.
1.
2.
3.
Desired inventory levels:
Type of Inventory
January 1
April 1
July 1
Snare (bags)
Gumm (pounds)
Tarr (pounds)
8,100
12,100
18,200
9,300
10,300
13,400
14,300
20,400
25,200
4.
Direct labor: direct labor time is 15 minutes per bag at an hourly rate of $16 per hour.
5.
Selling and administrative expenses are expected to be 15% of sales plus $177,000 per quarter.
6.
Interest expense is $100,000.
7.
Income taxes are expected to be 30% of income before incometaxes.
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 $299,000 in quarter 1 and $427,500 in
quarter 2.
(Note: Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.)
Preparethe sales budget.
COOK FARM SUPPLY COMPANY
Sales Budget
Quarter
Six
1.
2
Months
2$
$
$
$
$
$
Preparethe production budget.
COOK FARM SUPPLY COMPANY
Production Budget
Quarter
Six
1
2
Months
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