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Sales: quarter 1,28,600 bags; quarter 2,42,800 bags. Selling price is $63 per bag. ...

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Accounting

Sales: quarter 1,28,600 bags; quarter 2,42,800 bags. Selling price is $63 per bag.
Direct materials: each bag of Snare requires 5 pounds of Gumm at a cost of $4 per pound and 6 pounds of Tarr at $1.5 per pound.
Desired inventory levels:
\table[[Type of Inventory,January 1,April 1,July 1],[Snare (bags),8,100,12,100,18,200],[Gumm (pounds),9,300,10,300,13,400],[Tarr (pounds),14,300,20,400,25,200]]
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 $177,000 per quarter.
Interest expense is $100,000.
Income taxes are expected to be 20% 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 $427,500 in quarte. Question a) prepare a sales budget
WILDHORSE FARM SUPPLY COMPANY Sales Budget
Quarter
1
2
Six
\table[[1],[$
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