BACK NEXT Problem 13-1 Bramble Company manufactures and sells a pesticide called
ID: 2438327 • Letter: B
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BACK NEXT Problem 13-1 Bramble Company manufactures and sells a pesticide called Snare. The following data are available for pr 1. Sales: quarter 1, 28,200 bags; quarter 2, 43,600 bags. Selling price is $63 per bag. 2. Direct materials: each bag of Snare requires 5 pounds of Gumm at a cost of $3.80 per pound and 6 pounds of Tarr at $1.75 per pound. 3. Desired inventory levels: eparing budgets for Snare for the first 2 quarters of 2017. Type of Inventory Snare (bags) Gumm (pounds) Tarr (pounds) January 1 Apr1 July 1 8,100 12,100 18,100 9,100 10,500 13,500 14,100 20,100 25,500 4. Direct labor: direct labor time is 15 minutes per bag at an hourly rate of $14 per hour. 5. Selling and administrative expenses are expected to be 15% of sales plus $177,000 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 budget for Tarr shows the cost of Tarr purchases to be $303,000 in quarter 1 and $426,500 in quarter 2. 2) the direct materialsExplanation / Answer
Answer 1 Bramble Company Sales Budget For the six month ended of June 2017 Quarter Six Month 1 2 Expected Unit sales 28200 43600 71800 Unit selling price $63.00 $63.00 $63.00 Total Sales Value $1,776,600.00 $2,746,800.00 $4,523,400.00 Answer 2 Bramble Company Production Budget For the six month ended of June 2017 Quarter Six Month 1 2 Ending Inventory 12100 18100 18100 Add : Sales 28200 43600 71800 Total Bags required 40300 61700 89900 Less : Beginning Inventory 8100 12100 8100 Production Budget (in bags) 32,200 49,600 81,800 Answer 3 Bramble Company Direct Material Budget - Gumm For the six month ended of June 2017 Quarter Six Month 1 2 Production Units 32,200 49,600 81,800 Gumm required per unit 5 5 5 Total Requirement 161,000 248,000 409,000 Add : Ending Inventory 10,500 13,500 13,500 Total Requirement 171,500 261,500 422,500 Less : Beginning Inventory 9,100 10,500 9,100 Material Purchases in Pounds 162,400 251,000 413,400 x Cost per pound $3.80 $3.80 $3.80 Direct Material Purchases $617,120.00 $953,800.00 $1,570,920.00 Answer 4 Bramble Company Direct Labour Budget For the six month ended of June 2017 Quarter Six Month 1 2 Production Budget (in bags) 32,200 49,600 81,800 x hours required per unit 0.25 0.25 0.25 Total Hours required 8,050 12,400 20,450 x Hourly Rate $14.00 $14.00 $14.00 Direct Labour cost $112,700.00 $173,600.00 $286,300.00 Answer 5 Bramble Company Selling and administrative budget For the six month ended of June 2017 Quarter Six Month 1 2 Sales $1,776,600 $2,746,800 $4,523,400 Variable expenses [15% of sales] $266,490.00 $412,020.00 $678,510.00 Add : Fixed Expenses $177,000.00 $177,000.00 $354,000.00 Selling and administrative cost $443,490.00 $589,020.00 $1,032,510.00 Answer 6 Bramble Company Budgeted Income Statement For the six month ended of June 2017 Sales $4,523,400.00 Less : Cost of goods sold [71800 bags * $37.38] $2,683,525.00 Gross Margin $1,839,875.00 Less : Selling and administrative expense $1,032,510.00 EBIT $807,365.00 Less : Interest Expense $100,000.00 EBT $707,365.00 Less : Tax @ 30% $212,209.50 Net Income $495,155.50 Cost per unit Direct Material cost - Gumm $19.00 - Tarr $10.50 Direct Labour cost $3.50 Manufacturing Overhead (125% of Labour cost) $4.38 Cost per unit $37.38
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