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, 28,200 bags; quarter 2, 43,600 bags. Selling price is $63 per bag.
2.		Direct materials: each bag of Snare requires 5 pounds of Gumm at a cost of $3.80 per pound and 6 pounds of Tarr at $1.75 per pound.
3.		Desired inventory levels:

Type of Inventory		January 1		April 1		July 1
Snare (bags)		8,100		12,100		18,100
Gumm (pounds)		9,100		10,500		13,500
Tarr (pounds)		14,100		20,100		25,500

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 $177,000 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 $303,000 in quarter 1 and $426,500 in quarter 2. (Note: Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.)

Question 9 of 11 COOK FARM SUPPLY COMPANY Budgeted Income Statement For the Six Months Ending June 30, 2020 V Sales 4523400 Cost of Goods Sold Gross Profit Selling and Administrative Expenses V 1032510 i Income from Operations Interest Expense 100000 i Income Before Income Tax = Income Tax Expense Net Income /(Loss) At