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 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 eTextbook and Media Assistance Used eTextbook 1 eTextbook 2 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

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 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 eTextbook and Media Assistance Used eTextbook 1 eTextbook 2 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

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 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

eTextbook and Media

Assistance Used

eTextbook 1
eTextbook 2

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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