Question

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 2020.

1.		Sales: quarter 1, 29,400 bags; quarter 2, 42,400 bags. Selling price is $63 per bag.
2.		Direct materials: each bag of Snare requires 4 pounds of Gumm at a cost of $3.80 per pound and 6 pounds of Tarr at $1.50 per pound.
3.		Desired inventory levels:

Type of Inventory		January 1		April 1		July 1
Snare (bags)		8,500		12,200		18,500
Gumm (pounds)		9,300		10,400		13,100
Tarr (pounds)		14,400		20,500		25,300

4.		Direct labor: direct labor time is 15 minutes per bag at an hourly rate of $16 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 $298,000 in quarter 1 and $423,500 in quarter 2.

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

(a) Your answer is correct. Prepare the sales budget. COOK FARM SUPPLY COMPANY Sales Budget For the Six Months Ending June 30, 2020 Quarter Six Months Expected Unit Sales 4 42,400 71800 Unit Selling Price | 63 Total Sales $1852200 $2671200 4523400

Please help me with this part !

Answer 1

Answer with working is given below

COOK FARM SUPPLY COMPANY Budgeted Income Statement For the six months Ending June 30, 2020 Sales Cost of Goods Sold Gross profit Selling and administrative expenses Income from Operations Interest expense Income before Income Tax Income Tax expense Net Income/(Loss) $4,523,400 $2,383,760 $2,139,640 $1,030,510 $1,109,130 $100,000 $1,009,130 $302,739 $706,391 Cost of Goods Sold Direct Material Gumm ( 71,800 X 4 pounds X $3.80) Tarr ( 71,800 X 6 pounds X $1.50 ) Direct Labor ( 71,800 x 0.25 X $16) Manufacturing Overhead ( 125% of Direct Labor) Total Cost of Goods Sold $1,091,360 $646,200 $287,200 $359,000 $2,383,760