Prepare the budgeted multiple-step income statement for the first 6 months. (Round intermediate calculations to 2 decimal places and final answer to 0 decimal places, e.g. 1,255.) COOK FARM SUPPLY COMPANY Budgeted Income Statement For the Six Months Ending June 30, 2017 Sales 4477400 Cost of Goods Sold 2825900 Gross Profit 1651500 Selling and Administrative Expenses 1031610 Income from Operations 619890 185967 Income Before Income Tax 433923 Income Tax Expense 185967 Net Income /(Loss) 433923 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. COOK FARM SUPPLY COMPANY Sales Budget For the Six Months Ending June 30, 2017 Quarter Six Months 2 Expected unit sales 29400 44000 73400 Unit selling price $ 61 61 61 1793400 $ $ 61 2684000 $ $ Total sales $ $ 4477400 Prepare the production budget. COOK FARM SUPPLY COMPANY Production Budget For the Six Months Ending June 30, 2017 Quarter - Six Months Expected Unit Sales 29400 44000 Add 4 : Desire Desired Ending Finished Goods Units - 12300 18500 Total Required Units 41700 62500 Beginning Finished Goods Units -8500 12300 Required Production Units 33200 50200 83400 COOK FARM SUPPLY COMPANY Direct Materials Budget-Gumm For the Six Months Ending June 30, 2017 Quarter Six Months Units to be Produced 33200 50200 Direct Materials per Unit 5 Total Pounds Needed for Production 166000 251000 10200 13100 Add : Desired Ending Direct Materials Total Materials Required Less 4 : Beginning Direct Materials 176200 264100 -9400 10200 Direct Materials Purchases 166800 253900 Cost per Pound 3.8 3.8 Total Cost of Direct Materials Purchases * 633840 $ 964820 $ 1598660 COOK FARM SUPPLY COMPANY Direct Labor Budget For the Six Months Ending June 30, 2017 Quarter Six Months Units to be produced 33200 50200 Direct Labor Time per Unit .25 .25 Total Required Direct Labor Hours 8300 12550 Direct Labor Cost per Hour 16 16 Total Direct Labor Cost 132800 200800 333600 333600 Prepare the selling and administrative expense budget. COOK FARM SUPPLY COMPANY Selling and Administrative Expense Budget For the Six Months Ending June 30, 2017 Quarter 1 2 Six Months Budgeted sales in units 29400 44000 73400 Variable Cost 269010 402600 671610 Fixed Cost 180000 180000 360000 Total 449010 582600 1031610