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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.

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.

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