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Cook Farm Supply Company manufactures and sells a pesticide called Snare. The following data are...

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Accounting

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, 28,000 bags; quarter 2, 42,000 bags. Selling price is $61 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

Snare (bags)

Gumm (pounds)

Tarr (pounds)

January 1

April 1

July 1

8,100

12,100

18,100

9,100 10,100 13,100

14,100

20.100

25,100

4.

5.

Direct labor: direct labor time is 15 minutes per bag at an hourly rate of $16 per hour.

Selling and administrative expenses are expected to be 15% of sales plus $176,000 per quarter.

image

Prepare the sales budget. Prepare the production budget

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