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, 40,000 bags; quarter 2, 56,000 bags. Selling price is $60 per bag
2. Direct labor: direct labor time is 15 minutes per bag at an hourly rate of S16 per hour
3. Direct Materials cost per bag of Snare is $24.20
5. Selling and administrative expenses are expected to be 15% of sales plus fixed expenses of $175,000 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 the manufacturing overhead budget shows expected costs to be 125% of direct labor cost.
Inventory facts
Type of Inventory 1/1/17 4/1/17 7/1/17
Snare (bags) 8,000 15,000 18,000
Remember that beginning inventory in a period is equal to the ending inventory in the prior period
Instructions
Prepare the budgeted multi-step income statement for the first 6 months and all required operating budgets by quarters. (Note: Use variable and fixed in the selling and administrative expense budget.) Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.