Reference no: EM132967496

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, 29,800 bags; quarter 2, 42,400 bags. Selling price is $62 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)                      8,100              12,100              18,100
Gumm (pounds)                    9,500               10,300               13,100
Tarr (pounds)                         14,100             20,100               25,200

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. Interest expense is $100,000.7.Income taxes are expected to be 30% of income before income taxes.

Problem 1: 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 $303,000 in quarter 1 and $422,500 in quarter 2.

(Note: Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.)
please create a sales budget, a production budget, a direct materials budget (Gumm) ((Round Cost per pound answers to 2 decimal places, e.g. 52.70.), a direct labor budget ( (Enter Direct labor time per unit in proportion to hours, e.g. for 45 minutes the proportion will be 0.75.), a selling and administrative expense budget, and a budgeted income statement ((Round intermediate calculations to 2 decimal places and final answer to 0 decimal places, e.g. 1,255.)