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 2,42,800bags. Selling price is $61per bag.2.Direct materials: each bag of Snare requires5pounds of Gumm at a cost of $3.80per pound and6pounds of Tarr at $1.50per pound.3.Desired inventory levels:

Type of Inventory

January 1

April 1

July 1

Snare (bags)8,30012,30018,200Gumm (pounds)9,10010,30013,300Tarr (pounds)14,50020,30025,400

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 $177,000per 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 $303,000in quarter 1 and $423,500in quarter 2.

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

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