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, 29,400 bags; quarter 2, 44,000 bags. Selling price is $61 per bag.
2.		Direct materials: each bag of Snare requires 5 pounds of Gumm at a cost of $3.8 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)		8,500		12,300		18,500
Gumm (pounds)		9,400		10,200		13,100
Tarr (pounds)		14,400		20,500		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 $180,000 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 $299,000 in quarter 1 and $426,500 in quarter 2.

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

COOK FARM SUPPLY COMPANY Budgeted Income Statement For the Six Months Ending June 30, 2017 Sales 4,477,400 Cost of Goods Sold 2,825,900 Gross Profit 1,651,500 Selling and Administrative Expenses 1,031,610 Income from Operations 699,890 Interest Expense 100,000 Income Before Income Tax 209,967 Income Tax Expense 209,967 Net Income/ (Loss)