Wildhorse 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, 29,000 bags; quarter 2, 41,000 bags. Selling price is $64 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			10,000		17,000
Gumm (kg)		10,000			10,000		14,000
Tarr (kg)		13,000			20,000		26,000

4.	Direct labour: Direct labour time is 15 minutes per bag at an hourly rate of $16.00 per hour.
5.	The company expects selling and administrative expenses to be 15% of sales plus $176,000 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 $299,000 in quarter 1 and $442,000 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.

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