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Smith Supply Company manufactures and sells a pesticide called 3 pacitos.
The following data are available for preparing budgets for 3 pacitos for the first 2 quarters of 2009.
1. Sales:			Quarter 1	Quarter 2
	Sales in Units		28,000	42,000
	Selling price per bag.		$60
2. Direct materials:			Each bag of 3 pacitos requires
	4	lbs. of Gunm at a cost of		$4.00	per pound
	6	lbs. of Tahr at a cost of		$1.50	Per pound.
3. Desired inventory levels:				1-Jan	1-Apr	1-Jul
		3 pacitos (bags)	goods	8,000	12,000	18,000
		Gunm (lbs)	Dir Mat	9,000	10,000	13,000
		Tahr (lbs)	Dir Mat	14,000	20,000	25,000
4. Direct labor: Direct labor time is, per bag
	0.25	hours (15 minutes) at an hourly rate of			$14.00	per hour.
5. Selling and administrative expenses are expected to be
		15%	of sales plus	$175,000	Per quarter.
6. Income taxes are expected to be				30%	of income from operations.
7. The manufacturing overhead budget shows expected costs to be of direct labor cost.							150%
Instructions:
(a) Prepare each of the following budgets by quarters for the next 6 months.
5-Factory overhead
6-Cost of Goods Sold
7-Selling and administrative expense budget
8-Budget income statement

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