Question

Problem 9-1A (Part Level Submission) 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 2017 1. Sales: quarter 1, 29,800 bags; quarter 2, 43,700 bags. Selling price is $63 per bag 2. Direct materials: each bag of Snare requires 4 pounds of Gumm at a cost of $3.8 per pound and 6 pounds of Tarr at $1.75 per pound 3. Desired inventory levels: Type of Inventory anuary 1 April 1 July 1 Snare (bags) Gumm (pounds) Tarr (pounds) 8,200 9,500 14,100 12,100 10,100 20,300 18,500 13,200 25,200 4. Direct labor: direct labor time is 15 minutes per bag at an hourly rate of $14 per hour 5. Selling and administrative expenses are expected to be 15% of sales plus $180,000 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 $423,500 in quarter2 Note: Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.)

Answer 1

Hi

Let me know in case any issue and query: