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, 42,200 bags. Selling price is $62 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 $1.50 per pound.
3. Desired inventory levels:
Type of Inventory January 1 April 1 July 1
Snare (bags) 8,100 12,200 18,500
Gumm (pounds) 9,300 10,100 13,100
Tarr (pounds) 14,100 20,200 25,200
4. Direct labor, direct labor time is 15 minutes per bag at an hourly rate of $16 per hour.