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|
|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.