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Project 2 Mastery Budget

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Business
School
Strayer University
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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, 28,600 bags; quarter 2, 42,600 bags. Selling price is $62 per bag.
2.
Direct materials: each bag of Snare requires 4 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
12,400
18,500
Gumm (pounds)
9,100
10,300
13,200
Tarr (pounds)
14,300
20,300
25,500
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 $177,000 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 $299,000 in quarter 1 and $425,500 in quarter 2.
(Note: Do not prepare the manufacturing overhead budget or the direct materials budget for
Tarr.)
Prepare the sales budget.

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COOK FARM SUPPLY COMPANY
Sales Budget
choose the accounting period
For the Six Months Ending June 30, 2020
Quarter
Six
Months
1
2
Expe
cted
unit
sales
enter a number of units
28600
enter a number of units
42600
enter a number of units
71200
Unit
sellin
g
price
$enter a dollar
amount
62
$enter a dollar
amount
62
$enter a dollar
amount
62
Total
sales
$enter a total dollar
amount
1773200
$enter a total dollar
amount
2641200
$enter a total dollar
amount
4414400
Prepare the production budget.
COOK FARM SUPPLY COMPANY
Production Budget
choose the accounting period
For the Six Months Ending June 30, 2020
Quarter
Six
Months
1
2
select an opening production budget
item
Expected Unit Sales
enter a
number of
units
28600
enter a
number of
units
42600
select between addition and
deduction
Add
: select a production budget
item
Desired Ending Finished Goods Units
enter a
number of
units
12400
enter a
number of
units
18500
select a summarizing line for the first
part
Total Required Units
enter a total
number of
units for the
first part
41000
enter a total
number of
units for the
first part
61100
select between addition and
deduction
Less
: select a production budget
enter a
number of
enter a
number of

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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, 28,600 bags; quarter 2, 42,600 bags. Selling price is $62 per bag. 2. Direct materials: each bag of Snare requires 4 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 12,400 18,500 Gumm (pounds) 9,100 10,300 13,200 14,300 20,300 25,500 Tarr (pounds) 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 $177,000 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 $299,000 in quarter 1 and $425,500 in quarter 2. (Note: Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.) Prepare the sales budget. COOK FARM SUPPLY COMPANY Sales Budget For the Six Months Ending June 30, 2020 choose the accounting period Quarter Expe cted unit sales Unit sellin g price 1 2 Six Months enter a number of units enter a number ...
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