Cook Farm Supply Co. Budget
Budgeting refers to through which people or various companies and organizations create a plan on how they are going to spend their money. The spending plan is generally referred to as a budget. The creation of a spending plan enables an individual or organization to determine prior whether they have sufficient funds to run their projects for a given duration, usually termed as financial period. Additionally, following the budget or spending plan enables one or the company to stay away from debt or makes them work their ways out of debt in any case they are involved in debts (Tysiac, 2018). The present paper presents the various required budget for Cook Farm Company for a 6-month duration ending on 30th June 2020.
Sales budget
Sales budget refers to a financial plan displaying how available resources or funds should be assigned to attain forecasted sales. The following is a sales budget for Cook Farm Company.
| Cook farm Co. | |||
| Sales Budget | |||
| For a 6-months period Ending On 30th June 2020. | |||
| Quarter | Six | ||
| 1 | 2 | Months | |
| Expected unit sales” | 28,400 | 44,000 | 72,400 |
| Unit selling price” | $62 | $62 | $62 |
| Total sales | $1,760,800 | $2,728,000 | $4,488,800 |
Production Budget
The table below presents the production budget for the Cook farm Company.
| Cook farm Co. | |||
| Production Budget | |||
| For 6 months Ending On 30th June 2020 | |||
| Quarter | Six | ||
| 1 | 2 | Months | |
| Expected unit sales | 28,400 | 44,000 | 72,400 |
| Add: Desired ending finished goods units. | 12,500 | 18,300 | 18,300 |
| Total required units. | 40,900 | 62,300 | 90,700 |
| Less: Beginning finished goods units | 8,100 | 12,500 | 8,100 |
| Required production unit | 32,800 | 49,800 | 82,600 |
Direct Materials Budget
The table below presents the direct materials budget for the Cook Farm Company.
| Cook farm Supply Co. | |||
| Direct Materials Budget – Gumm | |||
| For 6 months Ending On 30th June 2020. | |||
| Quarter | Six | ||
| 1 | 2 | Months | |
| Units to be produced | 32,800 | 49,800 | 82,600 |
| Direct materials per unit (pounds) | 4 | 4 | 5 |
| Total pounds needed for production | 131,200 | 199,200 | 413000 |
| Add: Desired ending direct materials (pounds) | 14,300 | 13,100 | 13,100 |
| Total materials required | 145,500 | 212,300 | 426,100 |
| Less: Beginning direct materials (pounds) | 9,100 | 14,300 | 9,100 |
| Direct materials purchases | 136,400 | 198,000 | 417,000 |
| Cost per pound | 3.8 | 3.8 | 3.8 |
| The total cost of direct materials purchases | $518,320 | $752,400 | $1,584,600 |
Direct Labor Budget
The table below presents the direct labor budget for the Cook farm Company
| Cook farm Supply Co. | |||
| Direct Labor Budget | |||
| For 6 months Ending On 30th June 2020. | |||
| Quarter | Six | ||
| 1 | 2 | Months | |
| Units to be produced | 32,800 | 49,800 | 82,600 |
| Direct labor hours per unit | 0.25 | 0.25 | 0.25 |
| Total required direct labor hours | 8,200 | 12,450 | 20,650 |
| Direct labor cost per hour | 14 | 14 | 14 |
| Total direct labor cost | $114,800 | $174,300 | $289,100 |
Selling & Administrative Budget
The table below presents the selling as well as the administrative budget for Cook Farm Company.
| Cook farm Supply Co. | |||
| Selling & Administrative Budget | |||
| For six months Ending On 30th June 2020. | |||
| Quarter | Six | ||
| 1 | 2 | Months | |
| Budgeted sales | 1,760,800 | 2,728,000 | 4,488,800 |
| Variable (.15 x sales) | $ 264,120 | $ 409,200 | $ 673,320 |
| Fixed | 180,000 | 180,000 | 180,000 |
| Total | $ 444,120 | $ 589,200 | $ 853,320 |
Budgeted Income Statement
The table below presents a budgeted income statement for the Cook farm Company.
| Cook farm Supply Co. | ||
| Budgeted Income Statement | ||
| For a 6 months period Ending On 30th June 2020. | ||
| Sales revenue | $ 4,488,800 | |
| Cost of goods sold 72,400*32.075) | 2,322,230 | |
| Gross Profit | 2,166,570 | |
| Selling and administrative expenses | 853,320 | |
| Income from operations | 1,313,250 | |
| Interest | 100,000 | |
| Income less interest | 1,213,250 | |
| Income tax expense (30%) | 363,975 | |
| Net income | $ 949,275 | |
| direct material | 4*3.8 +6* 1.5= 24.2 | |
| Direct labor | .25*14 = 3.5 | |
| manufacturing overhead = 125% of 3.5 = 4.375 | ||
| Cost per unit | 32.075 | |
References
Tysiac, K. (2018). The benefits of ‘budgeting for results.’ Journal of Accountancy.