Accounting Essay

676 words - 3 pages

Problem P9-1A Zelmer 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 2012.

1. Sales: Quarter 1 28,000 bags; Quarter 2 42,000 bags. Selling price is $60.00
per bag.
2. Direct materials: Each bag of Snare requires 4 pounds of Gumm at a cost of $4.00
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) 8,000 12,000 18,000
Gumm (pounds) 9,000 10,000 13,000
Tarr (pounds) 14,000 20,000 25,000
4. Direct labor: ...view middle of the document...

00 $4.00
Total cost of direct material purchases $516,000 $780,000 $1,296,000

ZELMER FARM SUPPLY COMPANY
Direct Labor Budget
For the Six Months Ending June 30, 2012
Quarter 6 Months
1 2
Units to be produced 32,000 48,000
Direct Labor Time per unit 0.25 0.25
Total required direct labor hours 8,000 12,000
Direct labor cost per hour $14.00 $14.00
Total direct labor cost $112,000 $16,800 $280,000

ZELMER FARM SUPPLY COMPANY
Selling and Administrative Expense Budget
For the Six Months Ending June 30, 2012
Quarter 6 Months
1 2
Budgeted sales in units 28,000 42,000 70,000

Variable 252,000 378,000 630,000
Fixed 175,000 175,000 980,000
Total $427,000 $553,000 $980,000

ZELMER FARM SUPPLY COMPANY
Budgeted Income Statement
For the Six Months Ending June 30,...

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