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 1,28,600bags; quarter 2,42,600bags. Selling price is $63per bag. 2. Direct materials: each bag of Snare requires5pounds of Gumm at a cost of $3.80per pound and6pounds of Tarr at $1.75per pound.

3. Desired inventory levels:

Type of Inventory January 1 April 1 July 1

Snare (bags) 8,200 12,100 18,500

Gumm (pounds) 9,400 10,300 13,400

Tarr (pounds) 14,500 20,100 25,500

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

5. Selling and administrative expenses are expected to be 15% of sales plus $176,000per 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 $300,000in quarter 1 and $422,500in quarter 2.

(Note:Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.)

(A) Prepare the direct labor budget.

(B) Prepare the selling and administrative expense budget.

(C) Prepare the budgeted multiple-step income statement for the first 6 months.