Reference no: EM132573805

Tandem Company manufactures pesticides for gardens. Kim is preparing the budget for the quarter ended June 30. She has gathered the following information.Tandem's sales manager reported that the company sold $1,200 bags in March. He has developed the following sales forecast. The expected sales price is $10 per bag.

April $2,000

May $3,000

June $5,000

July $2,500

August $1,500

However after experiencing difficulty in supplying customers in a timely fashion due to inventory shortages, the company established a policy requiring the ending Finished Goods Inventory to equal 10 percent of the following month's budgeted sales, in units. On March 31st, 5,000 bags were on hand.

Seven pounds of raw materials are required to fill each bag. The company wants to have raw materials on hand at the end of each month equal to 10 percent of the following month's production needs. On March 31, 15,000 pounds of materials were on hand. The raw materials used in production cost $0.60 per pound.

The standard labor time allowed for one bag is 30 minutes. The current direct labor rate is $15 per hour.

Required:

Question 1: From the above information prepare following budgets month wise for the second quarter. (i.e. for April, May and June)

a. Sales budget

b. Production budget

c. Direct material budget in quantity and $.

d. Direct labor budget