Question

1 Snare. The following data are available for preparing budgets for Snare for the first 2 quarters of 2020. Sales: quarter 1, 29,400 bags, quarter 2, 42,200 bags. Selling price is $62 per bag Direct materials: each bag of Snare requires 5 pounds of Gumm at a 2 cost of $3.80 per pound and 6 pounds of Tarr at $1.50 per pound. 3. Desired inventory levels: Type of Inventory Snare (bags Gummus) The pounds January 1 April 1 July 1 8.100 12,200 18.500 9,300 10,100 13,100 14.100 20,2005,200 5 Direct labor: direct labor time is 15 minutes per bag at an hourly rate of $16 per hour. Selling and administrative expenses are expected to be 15% of sales plus $179,000 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 $301,000 in quarter 1 and $424,500 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 Quarter Month Prepare the production budget. COOK FARM SUPPLY COMPANY Production Budget Quarter 2 Six Months

Answer 1

COOK FARM SUPPLY COMPANY

Sales Budget

	Quarter	Six Months
	1	2
Expected Unit Sales	29,400	42,200	71,600
Unit Selling Price	$62	$62	$62
Budgeted Sales in dollars	$1,822,800	$2,616,400	$4,439,200

Production Budget

	Quarter	Six Months
	1	2
Expected Unit Sales	29,400	42,200	71,600
Plus: Desired Ending Inventory	$12,200	18500	18500
Total Needs	$41,600	$60,700	$90,100
Less: Estimated Beginning Inventory	$8,100	$12,200	$8,100
Required Production Units	$33,500	$48,500	$82,000

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