Cook farm supply company manufactures

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Reference no: EM132987926

Question: 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, 29,200 bags; quarter 2, 43,200 bags. Selling price is $ 61 per bag.
2. Direct materials: each bag of Snare requires 5 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)	8,400	12,200	18,200
Gumm (pounds)	9,200	10,200	13,500
Tarr (pounds)	14,300	20,400	25,400

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 $ 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 $ 301,000 in quarter 1 and $ 425,500 in quarter 2.

Attachment:- Project Two Master Budget.rar

Reference no: EM132987926

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