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.
Prepare the sales budget. Prepare the production budget
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