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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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