Greene 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 2013.

1. Sales: Quarter 1, 28,000 bags; quarter 2, 42,000 bags. Selling price is $60 per bag.

2. Direct materials: Each bag of Snare requires 4 pounds of Gumm at a cost of $4 per pound and 6 pounds of Tarr at $1.50 per pound.

3. Desired inventory levels:

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 $175,000 per quarter.6. Income taxes are expected to be 30% of income from operations.Your assistant has prepared two budgets:(1) The manufacturing overhead budget shows expected costs to be 150% of direct labor cost.(2) The direct materials budget for Tarr shows the cost of Tarr purchases to be $297,000 in quarter 1 and $421,500 in quarter 2.InstructionsPrepare the budgeted income statement for the first 6 months and all required supporting budgets by quarters. (Note: Use variable and fixed in the selling and administrative expense budget.) Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.

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Type of Inventory Snare (bags) Gumm (pounds) Tarr (pounds) January 1 8,000 April 1 July 1 18,000 13,000 25,000 12,000 10,000 20,000 9,000 14,000