FIN 571 Rasmussen College Corporate Finance Questions Worksheet
Question Description
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.)
Prepare the sales budget.
COOK FARM SUPPLY COMPANY
Sales Budget
choose the accounting period
Quarter Six
Months 1 2
Expe
cted
unit
sales
enter a number of units enter a number of units enter a number of units
Unit
sellin
g
price
$enter a dollar amount $enter a dollar amount $enter a dollar amount
Total
sales
$enter a total dollar
amount
$enter a total dollar
amount
$enter a total dollar
amount
Prepare the production budget.
COOK FARM SUPPLY COMPANY
Production Budget
choose the accounting period
Quarter Six
Months 1 2
select an opening production budget item
enter a
number of
units
enter a
number of
units
select between addition and deduction
: select a
production budget item
enter a
number of
units
enter a
number of
units
select a summarizing line for the first
part
enter a total
number of
units for the
first part
enter a total
number of
units for the
first part
select between addition and deduction
enter a
enter a
: select a
production budget item
number of
units
number of
units
select a closing production budget item
enter a total
number of
units
enter a total
number of
units
enter a
total
number
of units
eTextbook and Media
Prepare the direct materials budget. (Round Cost per pound answers to 2 decimal
places, e.g. 52.70.)
COOK FARM SUPPLY COMPANY
Direct Materials Budget—Gumm
choose the accounting period
Quarter Six
Months 1 2
select an opening direct materials
budget item
enter a number
of units
enter a number
of units
select an item
enter the
amount of
pounds
enter the
amount of
pounds
select a summarizing line for the first
part
enter a total
amount of
pounds for the
first part
enter a total
amount of
pounds for the
first part
select between addition and
deduction
: select an item
enter the
amount of
pounds
enter the
amount of
pounds
select a summarizing line for the
second part
enter a total
amount of
pounds for the
second part
enter a total
amount of
pounds for the
second part
select between addition and
deduction
: select an item
enter the
amount of
pounds
enter the
amount of
pounds
select a summarizing line for the third
part
enter a total
amount of
pounds for the
third part
enter a total
amount of
pounds for the
third part
select an item
$enter a dollar
amount
$enter a dollar
amount
select a closing direct materials budget
item
$enter a total
dollar amount
$enter a total
dollar amount
$enter a
total
dollar
amount
Prepare the direct labor budget. (Enter Direct labor time per unit in proportion to
hours, e.g. for 45 minutes the proportion will be 0.75.)
COOK FARM SUPPLY COMPANY
Direct Labor Budget
choose the accounting period
Quarter Six
Months 1 2
select an opening labor budget
item
enter a number
of units
enter a number
of units
select a labor budget item
enter a number
of hours
enter a number
of hours
select a summarizing line for the
first part
enter a total
number of hours
for the first part
enter a total
number of hours
for the first part
select a labor budget item
$enter a dollar
amount
$enter a dollar
amount
select a closing labor budget
item
$enter a total
dollar amount
$enter a total
dollar amount
$enter a
total dollar
amount
Prepare the selling and administrative expense budget.
COOK FARM SUPPLY COMPANY
Selling and Administrative Expense Budget
choose the accounting period
Quarter Six
Months 1 2
select an item
enter a total
number of units
enter a total
number of units
enter a total
number of units
select an item
$enter a dollar
amount
$enter a dollar
amount
$enter a dollar
amount
select an item
enter a dollar
amount
enter a dollar
amount
enter a dollar
amount
select a closing budget item
$enter a total
dollar amount
$enter a total
dollar amount
$enter a total
dollar amount
eTextbook and Media
Prepare the budgeted multiple-step income statement for the first 6 months. (Round
intermediate calculations to 2 decimal places and final answer to 0 decimal
places, e.g. 1,255.)
COOK FARM SUPPLY COMPANY
Budgeted Income Statement
choose the accounting period
select an income statement item
$enter a dollar amount
select an income statement item
enter a dollar amount
select a summarizing line for the first part
enter a total amount for the
first part
select an income statement item
enter a dollar amount
select a summarizing line for the second part
enter a total amount for the
second part
select an income statement item
enter a dollar amount
select a summarizing line for the third part
enter a total amount for the
third part
select an income statement item
enter a dollar amount
select a closing name for the budgeted income statement
$enter a total net income
or loss amount
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