Novak Farm Supply Company manufactures and sells a fertilizer called Snare. The following data are available for preparing budgets for Snare for the first two quarters of 2022.

1. Sales: Quarter 1, 30,000 bags; quarter 2, 43,000 bags. Selling price is $60 per bag. 2. Direct materials: Each bag of Snare requires 4 kg of Gumm at $4.00 per kilogram and 6 kg of Tarr at $1.50 per kilogram. 3. Desired inventory levels:

Type of Inventory January 1 April 1 July 1 Snare (bags) 9,000 14,000 20,000 Gumm (kg) 8,000 11,000 12,000 Tarr (kg) 13,000 21,000 23,000

4. Direct labour: Direct labour time is 15 minutes per bag at an hourly rate of $12.00 per hour. 5. The company expects selling and administrative expenses to be 15% of sales plus $174,000 per quarter. 6. It expects income taxes to be 30% of income from operations.

Your assistant has prepared two budgets: (1) The manufacturing overhead budget shows expected costs to be 150% of direct labour cost. (2) The direct materials budget for Tarr shows the cost of Tarr purchases to be $295,000 in quarter 1 and $437,000 in quarter 2.

Prepare the following operating budgets by quarters. (Note: Classify items as variable and fixed in the selling and administrative expenses budget.) Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.

Prepare the direct materials budget by quarters.

NOVAK FARM SUPPLY COMPANY Direct Materials BudgetGumm For the Six Months Ending June 30, 2022 Quarter 1 2 Six Months select an opening direct materials budget item enter a number of units enter a number of units enter a number of units select an item enter a number of kilograms enter a number of kilograms enter a number of kilograms select a summarizing line for the first part enter a total number of kilograms for the first part enter a total number of kilograms for the first part enter a total number of kilograms for the first part select between addition and deduction : select an item enter a number of kilograms enter a number of kilograms enter a number of kilograms select a summarizing line for the second part enter a total number of kilograms for the second part enter a total number of kilograms for the second part enter a total number of kilograms for the second part select between addition and deduction : select an item enter a number of kilograms enter a number of kilograms enter a number of kilograms select a summarizing line for the third part enter a total number of kilograms for the third part enter a total number of kilograms for the third part enter a total number of kilograms for the third part select an item $enter a dollar amount $enter a dollar amount $enter a dollar amount select a closing direct materials budget item $enter a total dollar amount $enter a total dollar amount $enter a total dollar amount Prepare the selling and administrative expense budget by quarters.

NOVAK FARM SUPPLY COMPANY Selling and Administrative Expenses Budget For the Six Months Ending June 30, 2022 Quarter 1 2 Six Months select an item

$enter a dollar amount $enter a dollar amount $enter a dollar amount select an item $enter a dollar amount $enter a dollar amount $enter a dollar amount select an item enter a dollar amount enter a dollar amount enter a dollar amount select a closing name for this budget $enter a total amount $enter a total amount $enter a total amount Prepare the budgeted income statement for the first six months. (Round per unit calculations to 2 decimal places, e.g. 0.25 and final answers to 0 decimal places, e.g. 125.)

NOVAK FARM SUPPLY COMPANY Budgeted Income Statement For the Six Months Ending June 30, 2022 select an income statement item $enter a dollar amount select between addition and deduction :select an income statement item enter a dollar amount select a summarizing line for the first part enter a total amount for the first part select an income statement item enter a dollar amount select a summarizing line for the second part enter a total amount for the second part select an income statement item enter a dollar amount select a closing name for this statement $enter a total amount for this statement