Question

Problem 23-1A

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 2017.

1. Sales: quarter 1, 28,300 bags; quarter 2, 42,500 bags. Selling price is $61 per bag.
2. Direct materials: each bag of Snare requires 4 pounds of Gumm at a cost of $3.8 per pound and 6 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 12,300 18,100
Gumm (pounds) 9,200 10,200 13,400
Tarr (pounds) 14,500 20,200 25,300

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 $176,000 per quarter.
6. Interest expense is $100,000.
7. Income taxes are expected to be 30% 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 $303,000 in quarter 1 and $425,500 in quarter 2.

(Note: Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.)

[Partially correct answer.] Your answer is partially correct. Try again.

Prepare the sales budget.

COOK FARM SUPPLY COMPANY
Sales Budget
[Entry field with correct answer]

June 30, 2017
For the Quarter Ending June 30, 2017
For the Six Months Ending June 30, 2017
Quarter
Six
Months
1
2
Expected unit sales
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with incorrect answer]
Unit selling price
$
[Entry field with incorrect answer]
$
[Entry field with incorrect answer]
$
[Entry field with incorrect answer]
Total sales
$
[Entry field with incorrect answer]
$
[Entry field with incorrect answer]
$
[Entry field with incorrect answer]

Prepare the production budget.

COOK FARM SUPPLY COMPANY
Production Budget
[Entry field with correct answer]

For the Quarter Ending June 30, 2017
For the Six Months Ending June 30, 2017
June 30, 2017
Quarter
Six
Months
1
2
[Entry field with correct answer]

Beginning Direct Materials
Total Required Units
Cost per Pound
Direct Materials per Unit
Beginning Finished Goods Units
Desired Ending Direct Materials
Desired Ending Finished Goods Units
Total Materials Required
Required Production Units
Direct Labor Cost per Hour
Expected Unit Sales
Direct Materials Purchases
Direct Labor Time per Unit
Total Cost of Direct Materials Purchases
Total Direct Labor Cost
Total Required Direct Labor Hours
Total Pounds Needed for Production
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]

Add
Less
:
[Entry field with correct answer]

Total Required Direct Labor Hours
Total Materials Required
Direct Labor Time per Unit
Total Pounds Needed for Production
Direct Materials Purchases
Expected Unit Sales
Total Required Units
Total Cost of Direct Materials Purchases
Beginning Direct Materials
Beginning Finished Goods Units
Direct Materials per Unit
Direct Labor Cost per Hour
Required Production Units
Desired Ending Finished Goods Units
Total Direct Labor Cost
Cost per Pound
Desired Ending Direct Materials
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]

Direct Materials Purchases
Desired Ending Direct Materials
Total Required Units
Expected Unit Sales
Desired Ending Finished Goods Units
Direct Labor Cost per Hour
Total Direct Labor Cost
Required Production Units
Direct Labor Time per Unit
Direct Materials per Unit
Total Cost of Direct Materials Purchases
Total Required Direct Labor Hours
Total Pounds Needed for Production
Total Materials Required
Beginning Direct Materials
Beginning Finished Goods Units
Cost per Pound
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]

Add
Less
:
[Entry field with correct answer]

Total Required Direct Labor Hours
Direct Labor Time per Unit
Total Pounds Needed for Production
Beginning Finished Goods Units
Cost per Pound
Total Required Units
Total Materials Required
Beginning Direct Materials
Direct Materials Purchases
Desired Ending Finished Goods Units
Desired Ending Direct Materials
Direct Materials per Unit
Direct Labor Cost per Hour
Expected Unit Sales
Required Production Units
Total Cost of Direct Materials Purchases
Total Direct Labor Cost
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]

Desired Ending Finished Goods Units
Beginning Finished Goods Units
Direct Materials per Unit
Total Materials Required
Total Cost of Direct Materials Purchases
Expected Unit Sales
Total Pounds Needed for Production
Total Required Direct Labor Hours
Total Required Units
Direct Labor Cost per Hour
Direct Labor Time per Unit
Required Production Units
Desired Ending Direct Materials
Direct Materials Purchases
Total Direct Labor Cost
Cost per Pound
Beginning Direct Materials
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with incorrect answer]

LINK TO TEXT
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[Partially correct answer.] Your answer is partially correct. Try again.

Prepare the direct materials budget. (Round Cost per pound answers to 2 decimal places, e.g. 52.70.)

COOK FARM SUPPLY COMPANY
Direct Materials Budget—Gumm
[Entry field with correct answer]

For the Six Months Ending June 30, 2017
For the Quarter Ending June 30, 2017
June 30, 2017
Quarter
Six
Months
1
2
[Entry field with correct answer]

Total Pounds Needed for Production
Total Required Direct Labor Hours
Direct Materials Purchases
Desired Ending Finished Goods Units
Desired Ending Direct Materials
Expected Unit Sales
Total Required Units
Total Direct Labor Cost
Direct Labor Cost per Hour
Units to be Produced
Total Cost of Direct Materials Purchases
Total Materials Required
Direct Labor Time per Unit
Beginning Direct Materials
Beginning Finished Goods Units
Cost per Pound
Direct Materials per Unit
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]

Total Pounds Needed for Production
Total Required Units
Total Materials Required
Direct Labor Time per Unit
Direct Materials per Unit
Total Direct Labor Cost
Cost per Pound
Beginning Direct Materials
Beginning Finished Goods Units
Desired Ending Direct Materials
Total Required Direct Labor Hours
Units to be Produced
Desired Ending Finished Goods Units
Direct Labor Cost per Hour
Direct Materials Purchases
Expected Unit Sales
Total Cost of Direct Materials Purchases
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]

Beginning Finished Goods Units
Total Cost of Direct Materials Purchases
Total Pounds Needed for Production
Desired Ending Direct Materials
Desired Ending Finished Goods Units
Total Required Units
Total Required Direct Labor Hours
Units to be Produced
Direct Labor Time per Unit
Total Materials Required
Beginning Direct Materials
Cost per Pound
Direct Labor Cost per Hour
Direct Materials per Unit
Direct Materials Purchases
Expected Unit Sales
Total Direct Labor Cost
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]

Add
Less
:
[Entry field with correct answer]

Direct Materials per Unit
Total Direct Labor Cost
Desired Ending Direct Materials
Total Required Direct Labor Hours
Direct Materials Purchases
Direct Labor Time per Unit
Beginning Direct Materials
Total Cost of Direct Materials Purchases
Total Required Units
Units to be Produced
Beginning Finished Goods Units
Total Materials Required
Cost per Pound
Direct Labor Cost per Hour
Expected Unit Sales
Total Pounds Needed for Production
Desired Ending Finished Goods Units
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]

Beginning Direct Materials
Direct Materials per Unit
Units to be Produced
Desired Ending Direct Materials
Direct Materials Purchases
Beginning Finished Goods Units
Total Cost of Direct Materials Purchases
Cost per Pound
Total Required Direct Labor Hours
Desired Ending Finished Goods Units
Total Materials Required
Expected Unit Sales
Total Direct Labor Cost
Direct Labor Cost per Hour
Total Pounds Needed for Production
Total Required Units
Direct Labor Time per Unit
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]

Add
Less
:
[Entry field with correct answer]

Total Pounds Needed for Production
Total Cost of Direct Materials Purchases
Units to be Produced
Total Direct Labor Cost
Desired Ending Direct Materials
Cost per Pound
Total Required Direct Labor Hours
Desired Ending Finished Goods Units
Direct Labor Time per Unit
Total Materials Required
Total Required Units
Beginning Direct Materials
Direct Labor Cost per Hour
Direct Materials per Unit
Beginning Finished Goods Units
Direct Materials Purchases
Expected Unit Sales
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]

Direct Materials Purchases
Desired Ending Finished Goods Units
Total Materials Required
Direct Labor Time per Unit
Direct Materials per Unit
Direct Labor Cost per Hour
Units to be Produced
Desired Ending Direct Materials
Expected Unit Sales
Total Cost of Direct Materials Purchases
Beginning Finished Goods Units
Cost per Pound
Total Direct Labor Cost
Total Pounds Needed for Production
Total Required Direct Labor Hours
Total Required Units
Beginning Direct Materials
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]

Total Direct Labor Cost
Expected Unit Sales
Total Cost of Direct Materials Purchases
Direct Labor Time per Unit
Total Required Units
Direct Materials Purchases
Beginning Finished Goods Units
Direct Materials per Unit
Beginning Direct Materials
Units to be Produced
Total Materials Required
Desired Ending Finished Goods Units
Total Pounds Needed for Production
Direct Labor Cost per Hour
Total Required Direct Labor Hours
Cost per Pound
Desired Ending Direct Materials
$
[Entry field with incorrect answer]
$
[Entry field with incorrect answer]
[Entry field with correct answer]

Total Pounds Needed for Production
Total Required Units
Direct Labor Cost per Hour
Direct Materials Purchases
Total Required Direct Labor Hours
Desired Ending Finished Goods Units
Units to be Produced
Direct Labor Time per Unit
Beginning Direct Materials
Beginning Finished Goods Units
Cost per Pound
Total Direct Labor Cost
Direct Materials per Unit
Total Materials Required
Desired Ending Direct Materials
Expected Unit Sales
Total Cost of Direct Materials Purchases
$
[Entry field with incorrect answer]
$
[Entry field with incorrect answer]
$
[Entry field with incorrect answer]

Prepare the direct labor budget. (Enter Direct labor time per unit in proportion to hours, e.g. for 45 minutes the proportion will be 0.75.)

COOK FARM SUPPLY COMPANY
Direct Labor Budget
[Entry field with correct answer]

For the Six Months Ending June 30, 2017
June 30, 2017
For the Quarter Ending June 30, 2017
Quarter
Six
Months
1
2
[Entry field with correct answer]

Direct Materials Purchases
Total Materials Required
Desired Ending Finished Goods Units
Total Pounds Needed for Production
Total Required Direct Labor Hours
Beginning Direct Materials
Beginning Finished Goods Units
Expected Unit Sales
Cost per Pound
Total Cost of Direct Materials Purchases
Total Required Units
Desired Ending Direct Materials
Direct Labor Cost per Hour
Total Direct Labor Cost
Direct Labor Time per Unit
Units to be Produced
Direct Materials per Unit
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]

Expected Unit Sales
Cost per Pound
Total Pounds Needed for Production
Total Required Direct Labor Hours
Total Materials Required
Total Required Units
Total Direct Labor Cost
Desired Ending Direct Materials
Total Cost of Direct Materials Purchases
Units to be Produced
Desired Ending Finished Goods Units
Direct Labor Cost per Hour
Beginning Direct Materials
Direct Materials Purchases
Beginning Finished Goods Units
Direct Labor Time per Unit
Direct Materials per Unit
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]

Beginning Direct Materials
Beginning Finished Goods Units
Direct Labor Cost per Hour
Total Required Direct Labor Hours
Cost per Pound
Desired Ending Direct Materials
Desired Ending Finished Goods Units
Direct Materials Purchases
Total Cost of Direct Materials Purchases
Direct Labor Time per Unit
Total Materials Required
Expected Unit Sales
Direct Materials per Unit
Total Direct Labor Cost
Total Pounds Needed for Production
Total Required Units
Units to be Produced
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]

Desired Ending Direct Materials
Direct Materials per Unit
Expected Unit Sales
Direct Materials Purchases
Total Materials Required
Desired Ending Finished Goods Units
Total Pounds Needed for Production
Beginning Direct Materials
Total Cost of Direct Materials Purchases
Total Direct Labor Cost
Beginning Finished Goods Units
Direct Labor Cost per Hour
Units to be Produced
Cost per Pound
Total Required Units
Direct Labor Time per Unit
Total Required Direct Labor Hours
$
[Entry field with incorrect answer]
$
[Entry field with incorrect answer]
[Entry field with correct answer]

Cost per Pound
Direct Labor Time per Unit
Total Required Direct Labor Hours
Units to be Produced
Beginning Direct Materials
Direct Materials Purchases
Direct Materials per Unit
Beginning Finished Goods Units
Desired Ending Finished Goods Units
Direct Labor Cost per Hour
Desired Ending Direct Materials
Total Cost of Direct Materials Purchases
Expected Unit Sales
Total Direct Labor Cost
Total Required Units
Total Materials Required
Total Pounds Needed for Production
$
[Entry field with incorrect answer]
$
[Entry field with incorrect answer]
$
[Entry field with incorrect answer]

Prepare the selling and administrative expense budget.

COOK FARM SUPPLY COMPANY
Selling and Administrative Expense Budget
[Entry field with correct answer]

June 30, 2017
For the Quarter Ending June 30, 2017
For the Six Months Ending June 30, 2017
Quarter
Six
Months
1
2
[Entry field with correct answer]

Variable Cost
Budgeted sales in units
Total
Fixed Cost
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with incorrect answer]

[Entry field with correct answer]

Budgeted sales in units
Variable Cost
Fixed Cost
Total
$
[Entry field with incorrect answer]
$
[Entry field with incorrect answer]
$
[Entry field with incorrect answer]
[Entry field with correct answer]

Variable Cost
Fixed Cost
Total
Budgeted sales in units
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with incorrect answer]
[Entry field with correct answer]

Budgeted sales in units
Total
Fixed Cost
Variable Cost
$
[Entry field with incorrect answer]
$
[Entry field with incorrect answer]
$
[Entry field with incorrect answer]

LINK TO TEXT
LINK TO TEXT

[Partially correct answer.] Your answer is partially correct. Try again.

Prepare the budgeted multiple-step income statement for the first 6 months. (Round intermediate calculations to 2 decimal places and final answer to 0 decimal places, e.g. 1,255.)

COOK FARM SUPPLY COMPANY
Budgeted Income Statement
[Entry field with correct answer]

June 30, 2017
For the Quarter Ending June 30, 2017
For the Six Months Ending June 30, 2017
[Entry field with correct answer]

Sales
Interest Expense
Income Before Income Tax
Beginning Inventory
Operating Expenses
Net Income / (Loss)
Purchases
Selling and Administrative Expenses
Gross Profit
Cost of Goods Sold
Total Operating Expenses
Ending Inventory
Income from Operations
Income Tax Expense
$
[Entry field with incorrect answer]
[Entry field with correct answer]

Total Operating Expenses
Income from Operations
Income Tax Expense
Beginning Inventory
Cost of Goods Sold
Net Income / (Loss)
Interest Expense
Operating Expenses
Ending Inventory
Gross Profit
Purchases
Selling and Administrative Expenses
Sales
Income Before Income Tax
[Entry field with incorrect answer]
[Entry field with correct answer]

Income Tax Expense
Gross Profit
Purchases
Interest Expense
Income Before Income Tax
Sales
Selling and Administrative Expenses
Total Operating Expenses
Net Income / (Loss)
Income from Operations
Beginning Inventory
Cost of Goods Sold
Operating Expenses
Ending Inventory
[Entry field with incorrect answer]
[Entry field with correct answer]

Operating Expenses
Cost of Goods Sold
Selling and Administrative Expenses
Sales
Beginning Inventory
Ending Inventory
Total Operating Expenses
Gross Profit
Purchases
Interest Expense
Income from Operations
Income Before Income Tax
Income Tax Expense
Net Income / (Loss)
[Entry field with incorrect answer]
[Entry field with incorrect answer]

Income from Operations
Gross Profit
Beginning Inventory
Net Income / (Loss)
Interest Expense
Purchases
Sales
Selling and Administrative Expenses
Income Tax Expense
Cost of Goods Sold
Income Before Income Tax
Total Operating Expenses
Operating Expenses
Ending Inventory
[Entry field with incorrect answer]
[Entry field with incorrect answer]

Net Income / (Loss)
Beginning Inventory
Income Before Income Tax
Operating Expenses
Gross Profit
Purchases
Cost of Goods Sold
Sales
Ending Inventory
Income from Operations
Income Tax Expense
Selling and Administrative Expenses
Total Operating Expenses
Interest Expense
[Entry field with incorrect answer]
[Entry field with incorrect answer]

Purchases
Net Income / (Loss)
Cost of Goods Sold
Operating Expenses
Sales
Selling and Administrative Expenses
Income from Operations
Ending Inventory
Total Operating Expenses
Income Tax Expense
Interest Expense
Income Before Income Tax
Beginning Inventory
Gross Profit
[Entry field with incorrect answer]
[Entry field with incorrect answer]

Total Operating Expenses
Gross Profit
Interest Expense
Operating Expenses
Income Before Income Tax
Income from Operations
Beginning Inventory
Cost of Goods Sold
Income Tax Expense
Net Income / (Loss)
Ending Inventory
Purchases
Sales
Selling and Administrative Expenses
[Entry field with incorrect answer]
[Entry field with correct answer]

Gross Profit
Income from Operations
Sales
Beginning Inventory
Interest Expense
Total Operating Expenses
Cost of Goods Sold
Income Before Income Tax
Selling and Administrative Expenses
Ending Inventory
Income Tax Expense
Net Income / (Loss)
Operating Expenses
Purchases
$
[Entry field with incorrect answer]

Answer 1

1)   Cook Farm Supply Company

Sales Budget for the six months ending June 30, 2017   

	Quarter		Six
Particulars	1	2	Months
Expected Units Sales (A)	28,300	42,500	70,800
Sales Price per unit (B)	$61	$61	$61
Total Sales (A*B)	1,726,300	2,592,500	4,318,800

2) Cook Farm Supply Company

Production Budget for the six months ending June 30, 2017   

	Quarter		Six
Particulars	1	2	Months
Expected Units Sales	28,300	42,500	70,800
Add: Desired ending finished goods units	12,300	18,100	18,100
Total required units	40,600	60,600	88,900
Less: Beginning finished goods units	(8,400)	(12,300)	(8,400)
Required production units	32,200	48,300	80,500

3) Cook Farm Supply Company

Direct Materials Budget-Gumm

For the six months ending June 30, 2017 (Amounts in $)

	Quarter		Six
Particulars	1	2	Months
Units to be produced (A)	32,200	48,300	80,500
Direct Materials per unit (lbs.) (B)	4 lbs.	4 lbs.	4 lbs.
Total pounds needed for production (A*B)	128,800	193,200	322,000
Add: Desired Ending direct materials	10,200	13,400	13,400
Total materials required	139,000	206,600	335,400
Less: Beginning direct materials	(9,200)	(10,200)	(9,200)
Direct Materials purchases (1)	129,800	196,400	326,200
Cost per pound (2)	$3.80	$3.80	$3.80
Total cost of direct materials purchases (1*2)	493,240	746,320	1,239,560

4) Cook Farm Supply Company

Direct Materials Budget-Tarr

For the six months ending June 30, 2017 (Amounts in $)

	Quarter		Six
Particulars	1	2	Months
Units to be produced (A)	32,200	48,300	80,500
Direct Materials per unit (lbs.) (B)	6 lbs.	6 lbs.	6 lbs.
Total pounds needed for production (A*B)	193,200	289,800	483,000
Add: Desired Ending direct materials	20,200	25,300	25,300
Total materials required	213,400	315,100	508,300
Less: Beginning direct materials	(14,500)	(20,200)	(14,500)
Direct Materials purchases (1)	198,900	294,900	493,800
Cost per pound (2)	$1.75	$1.75	$1.75
Total cost of direct materials purchases (1*2)	348,075	516,075	864,150

5) Cook Farm Supply Company

Direct Labor Budget

For the six months ending June 30, 2017 (Amounts in $)

	Quarter		Six
Particulars	1	2	Months
Units to be produced (A)	32,200	48,300	80,500
Direct Labor Hours per unit (B)	1/4	1/4	1/4
Total required direct labor hours (C = A*B)	8,050	12,075	20,125
Direct Labor cost per hour (D)	$14	$14	$14
Total direct labor cost (C*D)	112,700	169,050	281,750