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Quiz+4+Ch+9+Take+Home - 1 st quarter and $67,000 in the 2...

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Chapter 9 Take home Quiz ACCT 2101 I. Tilger Farm Supply Company manufactures and sells a fertilizer called Basic II. The following data are available for preparing budgets for Basic II for the first 2 quarters of 2005. 1. Sales: 1 st Quarter, 40,000 bags; 2 nd quarter, 55,000 bags. Selling price is $60 per bag. 2. Direct Materials: Each bag of Basic II requires 6 pounds of Crup at a cost of $3 per pound and 10 pounds of Dert at $1.50 per pound. 3. Desired inventory levels: Type of Inventory January 1 April 1 July 1 Basic II (bags) 10,000 15,000 20,000 Crup (pounds) 9,000 12,000 15,000 Dert (pounds) 15,000 20,000 25,000 4. Direct labor: Direct labor time is 15 minutes per bag at an hourly rate of $12 per hour. 5. Selling and administrative expenses are expected to be 10% of sales plus $150,000 per quarter. 6. Variable Manufacturing Overhead costs are expected to be 20% of Direct Labor cost and Fixed Manufacturing Overhead costs are expected to be $60,000 in the
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Unformatted text preview: 1 st quarter and $67,000 in the 2 nd quarter. 7. Income taxes are expected to be 30% of income from operations. Your assistant has prepared the direct materials budget for Dert which shows the cost of Dert to be $682, 500 in the 1 st quarter and $907, 500 in 2 nd quarter. Instructions Prepare the budgeted income statement for the first 6 months of 2005 and all required supporting budgets by quarters. ( Note: Use variable and fixed in the selling and administrative expense budget.) Do not prepare the direct materials budget for Dert. (Hint: You have to calculate MOH per unit to calculate the total cost per bag. You must calculate total cost per bag to determine Cost of Goods Sold for your Budgeted Income Statement.) All budgets should be written NEATLY with appropriate headings....
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