Budgetary Planning

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 $2017.$

Sales: quarter $1,40,000$ bags; quarter $2,56,000$ bags. The selling price is $$60$ per bag.

Direct materials: each bag of Snare requires $4$ pounds of Gumm for $$3\mathrm{.}80$ per pound and $6$ pounds of Tarr at $$1\mathrm{.}50$ per pound.

Desired inventory levels:

$\backslash$table$[[,,$April $1,$July $1],[$Type of Inventory,January $1,15,000,18,000],[$Snare $($bags$),8,000,10,000,13,000],[$Gumm $($pounds$),9,000,20,000,25,000]]$

Direct labor: direct labor time is $15$ minutes per bag at an hourly rate of $$16$ per hour.

Selling and administrative expenses are expected to be $15\%$ of sales plus $$175,000$ per quarter.

Interest expense is $$100,000.$

Income taxes are expected to be $30\%$ of income before income taxes.

The following additional information is also provided:

The manufacturing overhead budget shows expected costs to be $125\%$ of direct labor costs.

The direct materials budget for Tarr shows the cost of Tarr purchases to be $$297,000$ in quarter $1$ and $$439,500$ in quarter $2.$

Prepare the budgeted multiple$-$step income statement for the first $6$ months and all required operating budgets $($i$.$e$.,$ sales budget, production budget, direct materials budget, direct labor budget, and selling and administrative expense budget$).$

Note:

Use variable and fixed in the selling and administrative expense budget.

Do not prepare Tarr's manufacturing overhead budget or direct materials budget. $($The information is provided in the problem above.$)$