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, 28,000 bags; quarter 2, 42,000 bags. Selling price is $61 per bag. 2. Direct materials: each bag of Snare requires 4 pounds of Gumm at a cost of $3.80 per pound and 6 pounds of Tarr at $1.50 per pound. 3. Desired inventory levels: Type of Inventory January 1 April 1 July 1 Snare (bags) 8,100 12,100 18,100 Gumm (pounds) 9,100 10,100 13,100 Tarr (pounds) 14,100 20,100 25,100 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 $176,000 per 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 $298,000 in quarter 1 and $422,500 in quarter 2. (Note: Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.) 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 amount $enter a amount $enter a amount Total sales $enter a total amount $enter a total amount $enter a total 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 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 amount $enter a amount select a closing direct materials budget item $enter a total amount $enter a total amount $enter a total amount

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, 28,000 bags; quarter 2, 42,000 bags. Selling price is $61 per bag. 2. Direct materials: each bag of Snare requires 4 pounds of Gumm at a cost of $3.80 per pound and 6 pounds of Tarr at $1.50 per pound. 3. Desired inventory levels: Type of Inventory January 1 April 1 July 1 Snare (bags) 8,100 12,100 18,100 Gumm (pounds) 9,100 10,100 13,100 Tarr (pounds) 14,100 20,100 25,100 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 $176,000 per 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 $298,000 in quarter 1 and $422,500 in quarter 2. (Note: Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.) 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 amount $enter a amount $enter a amount Total sales $enter a total amount $enter a total amount $enter a total 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 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 amount $enter a amount select a closing direct materials budget item $enter a total amount $enter a total amount $enter a total amount

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter7: Budgeting

Section: Chapter Questions

Problem 1PA: Lens Junction sells lenses for $45 each and is estimating sales of 15,000 units in January and...

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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, 28,000 bags; quarter 2, 42,000 bags. Selling price is $61 per bag.
2.		Direct materials: each bag of Snare requires 4 pounds of Gumm at a cost of $3.80 per pound and 6 pounds of Tarr at $1.50 per pound.
3.		Desired inventory levels:

Type of Inventory	January 1	April 1	July 1
Snare (bags)	8,100	12,100	18,100
Gumm (pounds)	9,100	10,100	13,100
Tarr (pounds)	14,100	20,100	25,100

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 $176,000 per 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 $298,000 in quarter 1 and $422,500 in quarter 2.

(Note: Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.)

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 amount	$enter a amount	$enter a amount
Total sales	$enter a total amount	$enter a total amount	$enter a total 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

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 amount	$enter a amount
select a closing direct materials budget item	$enter a total amount	$enter a total amount	$enter a total amount

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