Case Study 2

ACCT2031 Case Study 2

Caprie Pets Food Company manufactures and sells dog food called Caprie Supreme. The following data are available for preparing budgets for Caprie Supreme for the first 2 quarters of 2019.

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  1. Sales: quarter 1 – 40,000 bags; quarter 2 – 50,000 bags. Selling price is $63 per bag.
  2. Direct materials: each bag of Caprie Supreme requires 5 pounds of protein at a cost of $3.80 per pound and 10 pounds of carbohydrates at $1.50 per pound.
  3. Desired inventory levels:
Type of Inventory January 1 April 1 July 1
Bags 10,000 15,000 20,000
Protein (pounds) 9,000 12,000 15,000
Carbohydrates (pounds) 15,000 20,000 25,000


  1. Direct labour: direct labour time is 15 minutes per bag at an hourly rate of $12 per hour.
  2. Interest expense is $70,000.
  3. Income taxes are expected to be 30% of income before income taxes.


The direct labour budget shows expected costs to be $135,000 in quarter 1 and 165,000 in quarter 2. The selling and administrative expenses budget shows expected costs to be $402,000 in quarter 1 and $465,000 in quarter 2. The manufacturing overhead budget shows expected costs to be 100% of direct labour cost. The direct materials budget for carbohydrates shows the cost of carbohydrates to be $682,500 in quarter 1 and $832,500 in quarter 2.



  • Prepare the sales budget for the first 6 months of 2019 by quarters.



  • Prepare the production budget for the first 6 months of 2019 by quarters.




















  • Prepare the direct materials budget for the first 6 months of 2019 by quarters.



  • Prepare the budgeted income statement for the first 6 months of 2019.








































~End of Assignment 2~


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