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ACCT 2101 : Final Exam Review Session Managerial Problems

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azuremammoth471
15 Mar 2019
School
LSU
Department
Accounting
Course
ACCT 2101
Professor
All

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Document Summary

Danner 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: sales: quarter 1, 28,000 bags; quarter 2, 42,000 bags. Selling price is per bag: direct materials: each bag of snare requires 4 pounds of gumm at a cost of per pound and 6 pounds of tarr at . 50 per pound, desired inventory levels: 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 ,000 in quarter 1 and ,500 in quarter 2. Hint: prepare the following budgets: sales budget, production budget, direct materials budget for gumm, direct labor budget. P18-1a matt reiss owns the fredonia barber shop. He employs five barbers and pays each a base rate of ,000 per month.

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Related Questions

Cook Farm Supply Company manufactures and sells a pesticidecalled Snare. The following data are available for preparingbudgets for Snare for the first 2 quarters of 2017.

1. Sales: quarter 1, 29,400 bags; quarter 2, 42,500 bags. Sellingprice is $63 per bag.
2. Direct materials: each bag of Snare requires 4 pounds of Gummat a cost of $3.8 per pound and 6 pounds of Tarr at $1.75 perpound.
3. Desired inventory levels:

Type of Inventory

January 1

April 1

July 1

Snare (bags)8,10012,20018,100Gumm (pounds)9,50010,10013,200Tarr(pounds)14,20020,50025,400

4. Direct labor: direct labor time is 15 minutes per bag at anhourly rate of $14 per hour.
5. Selling and administrative expenses are expected to be 15% ofsales plus $179,000 per quarter.
6. Interest expense is $100,000.
7. Income taxes are expected to be 30% of income before incometaxes.

Your assistant has prepared two budgets: (1) the manufacturingoverhead budget shows expected costs to be 125% of direct laborcost, and (2) the direct materials budget for Tarr shows the costof Tarr purchases to be $301,000 in quarter 1 and $426,500 inquarter 2.

a) Prepare the budgeted multiple-step income statement for thefirst 6 months.

Problem 23-1A (Part Level Submission)

Cook Farm Supply Company manufactures and sells a pesticidecalled Snare. The following data are available for preparingbudgets for Snare for the first 2 quarters of 2017.

1. Sales: quarter 1, 28,300 bags;quarter 2, 43,800 bags. Selling price is $61 per bag.

2. Direct materials: each bag ofSnare requires 4 pounds of Gumm at a cost of $3.8 per pound and 6pounds of Tarr at $1.50 per pound.

3. Desired inventory levels:

Type of Inventory

January 1

April 1

July 1

Snare (bags) 8,500 12,100 18,100

Gumm (pounds) 9,300 10,500 13,100

Tarr (pounds) 14,200 20,100 25,100

4. Direct labor: direct labortime is 15 minutes per bag at an hourly rate of $16 per hour.

5. Selling and administrativeexpenses are expected to be 15% of sales plus $177,000 perquarter.

6. Interest expense is$100,000.

7. Income taxes are expected tobe 30% of income before income taxes.

Your assistant has prepared two budgets: (1) the manufacturingoverhead budget shows expected costs to be 125% of direct laborcost, and (2) the direct materials budget for Tarr shows the costof Tarr purchases to be $301,000 in quarter 1 and $427,500 inquarter 2.

(a)

Your answer is correct.

Prepare the sales budget.

COOK FARM SUPPLY COMPANY

Sales Budget

Quarter

Six

Months

1

2

Expected unit sales

Unit selling price

$

$

$

Total sales

$

$

$

Prepare the production budget.

COOK FARM SUPPLY COMPANY

Production Budget

Quarter

Six

Months

1

2

:

:

LINK TO TEXT

LINK TO TEXT

By accessing this Question Assistance, you will learn while youearn points based on the Point Potential Policy set by yourinstructor.

Attempts: 5 of 5 used

(b)

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

COOK FARM SUPPLY COMPANY

Direct Materials Budget—Gumm

Quarter

Six

Months

1

2

:

:

$ $

$ $ $

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

COOK FARM SUPPLY COMPANY

Direct Labor Budget

Quarter

Six

Months

1

2

$ $

$ $ $

Prepare the selling and administrative expense budget.

COOK FARM SUPPLY COMPANY

Selling and Administrative Expense Budget

Quarter

Six

Months

1

2

$

$

$

$ $ $

E8-11 - Please explain how you arrived at your answers.Thank you!

Exercise 8-11 Direct Materials and Direct Labor Budgets [LO4,LO5]

The production department of Priston Company has submitted thefollowing forecast of units to be produced by quarter for theupcoming fiscal year.

1stQuarter 2ndQuarter 3rdQuarter 4thQuarter
Units to beproduced 9,000 10,000 11,000 8,000

In addition, the beginning raw materials inventory for the 1stQuarter is budgeted to be 3,600 pounds and the beginning accountspayable for the 1st Quarter is budgeted to be $17,100.

Each unit requires two pounds ofraw material that costs $2.00 per pound. Management desires to endeach quarter with a raw materials inventory equal to 20% of thefollowing quarter’s production needs. The desired ending inventoryfor the 4th Quarter is 6,000 pounds. Management plans to pay for70% of raw material purchases in the quarter acquired and 30% inthe following quarter. Each unit requires 0.5 direct labor-hoursand direct labor-hour workers are paid $14 per hour.

Required:
1a.

Prepare the company’s direct materials budget for the upcomingfiscal year. (Do not round intermediate calculations. Inputall amounts as positive values. Omit the "$" sign in yourresponse.)
Priston Company
Direct Materials Budget
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year
Production needs -pounds
(Click toselect)AddDeduct: (Click to select)Beginning inventoryEndinginventory
Total needs -pounds
(Click toselect)AddDeduct: (Click to select)Beginning inventoryEndinginventory
Raw materials to bepurchased - pounds
Cost of rawmaterials to be purchased $ $ $ $ $
1b.

Prepare a schedule of expected cash disbursements for purchasesof materials for the upcoming fiscal year. (Do not roundintermediate calculations. Leave no cells blank - be certain toenter "0" wherever required. Omit the "$" sign in yourresponse.)
Priston Company
Schedule of Expected Cash Disbursements for Materials
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year
Accounts payable,beginning balance $ $ $ $ $
1st Quarterpurchases
2nd Quarterpurchases
3rd Quarterpurchases
4th Quarterpurchases
Total cashdisbursements for materials $ $ $ $ $
2.

Complete the company's direct labor budget for the upcomingfiscal year, assuming that the direct labor workforce is adjustedeach quarter to match the number of hours required to produce theforecasted number of units produced. (Do not roundintermediate calculations. Omit the "$" sign in yourresponse.)
Priston Company
Direct Labor Budget
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year
Total directlabor-hours needed
Total direct laborcost $ $ $ $ $