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 1. Sales: quarter 1, 40,000 bags; quarter 2, 56,000 bags. Selling price is $60 per bag. 2. Direct materials: each bag of Snare requires 4 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 Snare (bag5) Gumm (pounds) Tarr (pounds) January 1 April 1Juy 1 8,000 15,000 18,000 9,000 10,000 13,000 14,000 20,000 25,000 4. Direct labor direct labor time is 15 minutes per bag at an hourly rate of $16 per hour 5. Selling and administrative expenses are expected to be 15% of sales plus $175 000 per quarter. 6 Interest Expense is $100,000. 7. Income taxes are expected to be 30% of income before income taxes Your assistant has prepared two budgets: (1) The manufacturing overhead budget shows expected costs to be 125% of direct labor cost, and (2) 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 Instructions Prepare the budgeted multi-step income statement for the first 6 months and all required operating 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 Tam COOK FARM SUPPLY COMPANY Sales Budget For the Six Months Ending June 30, 2017 Six 2 Months Expected unit sales Unit selling price Total sales cOOK FARM SUPPLY COMPANY Production Budget For the Six Months Ending June 30, 2017 Expected unit sales Add Desired ending finished goods units Total required units Less: Beginning finished goods units Required production units COOK FARM SUPPLY COMPANY Direct Materials Budget Gumm 30, 2017 Six Units to be produced Direct materials per unit (lbs ) Total pounds needed for production Add Desired ending direct materials (Obs) Total materials required Less: Beginning direct materials (bs) materials purchases