Glendo farm supply company manufactures and sells a

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Glendo 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 2014.

1.
Sales: Quarter 1, 29,500 bags; quarter 2, 43,600 bags. Selling price is $61 per bag.
2.
Direct materials: Each bag of Snare requires 5 pounds of Gumm at a cost of $4 per pound and 8 pounds of Tarr at $1.50 per pound.
3.
Desired inventory levels:

Type of Inventory


January 1


April 1


July 1

Snare (bags)
8,300
12,300
18,100
Gumm (pounds)
9,400
10,400
13,400
Tarr (pounds)
14,400
20,500
25,300
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 $179,000 per quarter.
6.
Income taxes are expected to be 30% of income from operations.

Your assistant has prepared two budgets: (1) The manufacturing overhead budget shows expected costs to be 150% of direct labor cost. (2) The direct materials budget for Tarr shows the cost of Tarr purchases to be $302,000 in quarter 1 and $424,000 in quarter 2.

Prepare the sales budget and the production budget

Reference no: EM13579614

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