WEEK 2 CSIA DISCwk7

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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.

1.

Sales: quarter 1,28,000bags; quarter 2,43,400bags. Selling price is $63per bag.

2.

Direct materials: each bag of Snare requires4pounds of Gumm at a cost of $3.80per pound and6pounds of Tarr at $1.50per pound.

3.

Desired inventory levels:

Type of Inventory

January 1

April 1

July 1

Snare (bags)

8,400

12,500

18,400

Gumm (pounds)

9,500

10,300

13,400

Tarr (pounds)

14,500

20,100

25,100

4.

Direct labor: direct labor time is 15 minutes per bag at an hourly rate of $16per hour.

5.

Selling and administrative expenses are expected to be 15% of sales plus $177,000per 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 $300,000in quarter 1 and $424,500in quarter 2.
(Note:Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.)
Part 1
Prepare the sales budget.

COOK FARM SUPPLY COMPANY
Sales Budget
choose the accounting period

Quarter

Six
Months

1

2

Expected unit sales

enter a number of units

enter a number of units

enter a number of units

Unit selling price

$enter a dollar amount

$enter a dollar amount

$enter a dollar amount

Total sales

$enter a total dollar amount

$enter a total dollar amount

$enter a total dollar amount
Prepare the production budget.

COOK FARM SUPPLY COMPANY
Production Budget
choose the accounting period

Quarter

Six
Months

1

2

select an opening production budget item

enter a number of units

enter a number of units

select between addition and deduction :select a production budget item

enter a number of units

enter a number of units

select a summarizing line for the first part

enter a total number of units for the first part

enter a total number of units for the first part

select between addition and deduction :select a production budget item

enter a number of units

enter a number of units

select a closing production budget item

enter a total number of units

enter a total number of units

enter a total number of units
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Part 2
Prepare the direct materials budget.
(Round Cost per pound answers to 2 decimal places, e.g. 52.70.)

COOK FARM SUPPLY COMPANY
Direct Materials Budget—Gumm
choose the accounting period

Quarter

Six
Months

1

2

select an opening direct materials budget item

enter a number of units

enter a number of units

select an item

enter the amount of pounds

enter the amount of pounds

select a summarizing line for the first part

enter a total amount of pounds for the first part

enter a total amount of pounds for the first part

select between addition and deduction :select an item

enter the amount of pounds

enter the amount of pounds

select a summarizing line for the second part

enter a total amount of pounds for the second part

enter a total amount of pounds for the second part

select between addition and deduction :select an item

enter the amount of pounds

enter the amount of pounds

select a summarizing line for the third part

enter a total amount of pounds for the third part

enter a total amount of pounds for the third part

select an item

$enter a dollar amount

$enter a dollar amount

select a closing direct materials budget item

$enter a total dollar amount

$enter a total dollar amount

$enter a total dollar amount
Prepare the direct labor budget.
(Enter Direct labor time per unit in proportion to hours, e.g. for 45 minutes the proportion will be 0.75.)

COOK FARM SUPPLY COMPANY
Direct Labor Budget
choose the accounting period

Quarter

Six
Months

1

2

select an opening labor budget item

enter a number of units

enter a number of units

select a labor budget item

enter a number of hours

enter a number of hours

select a summarizing line for the first part

enter a total number of hours for the first part

enter a total number of hours for the first part

select a labor budget item

$enter a dollar amount

$enter a dollar amount

select a closing labor budget item

$enter a total dollar amount

$enter a total dollar amount

$enter a total dollar amount
Prepare the selling and administrative expense budget.

COOK FARM SUPPLY COMPANY
Selling and Administrative Expense Budget
choose the accounting period

Quarter

Six
Months

1

2

select an item

enter a total number of units

enter a total number of units

enter a total number of units

select an item

$enter a dollar amount

$enter a dollar amount

$enter a dollar amount

select an item

enter a dollar amount

enter a dollar amount

enter a dollar amount

select a closing budget item

$enter a total dollar amount

$enter a total dollar amount

$enter a total dollar amount
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Part 3
Prepare the budgeted multiple-step income statement for the first 6 months.
(Round intermediate calculations to 2 decimal places and final answer to 0 decimal places, e.g. 1,255.)

COOK FARM SUPPLY COMPANY
Budgeted Income Statement
choose the accounting period

select an income statement item

$enter a dollar amount

select an income statement item

enter a dollar amount

select a summarizing line for the first part

enter a total amount for the first part

select an income statement item

enter a dollar amount

select a summarizing line for the second part

enter a total amount for the second part

select an income statement item

enter a dollar amount

select a summarizing line for the third part

enter a total amount for the third part

select an income statement item

enter a dollar amount

select a closing name for the budgeted income statement

$enter a total net income or loss amount
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