Sheridan 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 2022. 1. Sales: quarter 1,28,200 bags; quarter 2,42,400 bags. Selling price is $63 per bag. 2. Direct materials: each bag of Snare requires 4 pounds of Gumm at a cost of $4 per pound and 6 pounds of Tarr at $1.75 per pound. 3. Desired inventory levels: 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 20% 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 $301,000 in quarter 1 and $422,500 in quarter 2. (Note: Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.) SHERIDAN FARM SUPPLY COMPANY Budgeted Income Statement Total Operating Expenses Purchases Income from Operations Cost of Goods Sold Sales Interest Expense Income Tax Expense Beginning Inventory Selling and Administrative Expenses Ending Inventory Operating Expenses Gross Profit Net Income / (Loss) Income Before Income Tax