Glendo 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 2014.
| 1. | | Sales: Quarter 1, 28,900 bags; quarter 2, 42,000 bags. Selling price is $61 per bag. | | 2. | | Direct materials: Each bag of Snare requires 5 pounds of Gumm at a cost of $4 per pound and 7 pounds of Tarr at $1.75 per pound. | | 3. | | Desired inventory levels: |
| Type of Inventory | | January 1 | | April 1 | | July 1 | | Snare (bags) | | 8,400 | | 12,100 | | 18,300 | | Gumm (pounds) | | 9,300 | | 10,500 | | 13,200 | | Tarr (pounds) | | 14,300 | | 20,300 | | 25,200 |
| 4. | | Direct labor: Direct labor time is 15 minutes per bag at an hourly rate of $14 per hour. | | 5. | | Selling and administrative expenses are expected to be 15% of sales plus $178,000 per quarter. | | 6. | | Income taxes are expected to be 30% of income from operations. |
Your assistant has prepared two budgets: (1) The manufacturing overhead budget shows expected costs to be 150% of direct labor cost. (2) The direct materials budget for Tarr shows the cost of Tarr purchases to be $301,000 in quarter 1 and $424,000 in quarter 2.
Prepare the sales budget.
Prepare the production budget.
| ![]() |
KnowledgeCats
12 years ago
acc_-_glendo_farm_supply_company_solution.xlsx
