Question

Problem 21-1A Cook Farm Supply Company manufactures and sea pesticide called Snare. The following data are available for preparing budget for Snare for the first 2 urbs of 2017. 1. Sales: Quarter 1.29,300 quarter 2. 42.400 bags Sulling price 563 per baq. 2. Direct males: ach bag of Snare requires pounds of Gurmat ac of $3.8 pur pound and 6 pounds of Tarral $1.50 per pound. 3. Desd ay lives January 1 April 1 12,200 Type of Inventory Saare (bas) Gummpounds) Tart (pounds) July 1 18,500 13,100 25.300 9,300 14,400 20.500 4. Direct labor: direct labor time is 15 minute pe bagat an hourly rate of $14 per hour. 5. Selling and administrative exp e cted to be 15 olsas pa 5175,000 per u 6. Interest axpens S100,000 7. Inclas are espaced to be 30% of income before incolas . Your cart has prepared two bag (1) the manufacturing Overhead budget shows xpected to be 125% of direct labor cost, and (2) the direct materials budget for Tarr shows the cost of are purchases to be $298.000 in quart 1 and 5423,500 in qual 2. Prepare the budget COOK FARM SUPPLY COMPANY Sales Budget Expeed unit Sales Total sales Prepare the production budget COOK FARM SUPPLY COMPANY Production Budget Quarter LINK TO TEXT LINK TO TEXT VIDEO SIMILAR PROBLEM

Answer 1

COOK FARM SUPPLY COMPANY
Sales Budget
For The Six Month Ending June 30, 2017
	Quarter 1		Six Months
	1	2
Expected unit sales    (a)	29,300	42,400	71,700
Unit selling price      (b)	$63	$63	$63
Total sales                 (a) x (b)	$1,845,900	$2,671,200	$4,517,100

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COOK FARM SUPPLY COMPANY
Production Budget
For The Six Month Ending June 30, 2017
	Quarter 1		Six Months
	1	2
Expected unit sales	29,300	42,400
Add: Desired Ending Finished Goods Units	12,200	18,500
Total Required Units	41,500	60,900
Less: Beginning Finished Goods Units	8,500	12,200
Required Production Units	33,000	48,700	81,700

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COOK FARM SUPPLY COMPANY
Direct Material Budget - Gumm
For The Six Month Ending June 30, 2017
	Quarter 1		Six Months
	1	2
Units to be produced     [Refer production budget]      (a)	33,000	48,700
Direct Materials per Unit         (In pounds)                 (b)	4	4
Total Pounds Needed for Production                       (a x b)	132,000	194,800
Add: Desired Ending Direct Materials (pounds)	10,400	13,100
Total Materials Required	142,400	207,900
Less: Beginning Direct Materials (pounds)	9,300	10,400
Direct Materials Purchases                                     (c)	133,100	197,500
Cost per Pound                                                        (d)	$3.80	$3.80
Total Cost of Direct Materials Purchases        (c x d)	$505,780	$750,500	$1,256,280

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COOK FARM SUPPLY COMPANY
Direct Labor Budget
For The Six Month Ending June 30, 2017
	Quarter 1		Six Months
	1	2
Units to be produced     [Refer production budget]                   (a)	33,000	48,700
Direct Labor Time (hours) per Unit           (0.15 / 60)               (b)	0.25	0.25
Total Required Direct Labor Hours                                           (c = a x b)	8,250	12,175
Direct Labor Cost per Hour                                                       (d)	14	14
Total Direct Labor Cost                                                          (c x d)	115,500	170,450	285,950

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COOK FARM SUPPLY COMPANY
Selling and Administrative Expense Budget
For The Six Month Ending June 30, 2017
	Quarter 1		Six Months
	1	2
Budgeted Sales in Units	29,300	42,400	71,700
Variable Cost   [15% of sales]    (a)	$276,885	$400,680	$677,565
Fixed Cost                                    (b)	$176,000	$176,000	$352,000
Total                                             (a + b)	$452,885	$576,680	$1,029,565

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COOK FARM SUPPLY COMPANY
Budgeted Income Statement
For The Six Month Ending June 30, 2017
Sales                                       [Refer sales budget]	$4,517,100
Cost of Goods Sold                [Refer working note 1 & 2 below]	$2,300,136
Gross Profit                           [Sales - Cost of goods sold]	$2,216,964
Selling and Administrative Expenses	$1,029,565
Income from operatations      [Gross profit - Selling and Administrative Expenses]]	$1,187,399
Interest expense	$100,000
Income before Income Taxes    [Income from operations - Interest expense]	$1,087,399
Income Tax Expense                 [Income before income taxes x 30%]	$326,220
Net Income / (Loss)	$761,179

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Working note 1 - Computation of Cost per unit
Direct materials:
Gumm                                 (4 pounds x $3.80)	15.20
Tarr                                     (6 pounds x $1.50)	9.00	24.20
Direct labor                                (0.25 hours x $14)		3.50
Manufactured overhead budget   [Direct labor cost x 125% = $3.50 x 125%]		4.38
Cost per unit		32.08

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Working note 2 - Computation of Cost of Goods Sold
	Quarter 1	Quarter 2	6 months
Number of snare bags sold                                        (a)	29,300	42,400
Total cost per unit [Refer working note 1]                  (b)	32.08	32.08
Cost of Goods Sold                                                       (a x b)	$939,944	$1,360,192	$2,300,136