Question

VIEW Pullies Current Attempt in Progress 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, 28,200 bags; quarter 2,43,400 bags. Selling price is $63 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 12,500 18,300 Gumm (pounds) 9,100 10,200 13,100 Tarr (pounds) 14,200 20,500 25,500 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 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 $303,000 in quarter 1 and $423,500 in quarter 2. (Note: Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.)

Answer 1

Sales Budget
For the six months ending June 30,2020
	Quarter
	1	2	Six months
Expected unit sales	28200	43400	71600
Unit selling price	63	63	63
Total sales	1776600	2734200	4510800
Production Budget
For the six months ending June 30,2020
	Quarter
	1	2	Six months
Expected unit sales	28200	43400
Add: Desired ending Finished goods units	12500	18300
Total Required units	40700	61700
Less: Beginning Finished goods units	8100	12500
Required Production units	32600	49200	81800