Zelmer 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 2012. Sales: Quarter 1, 28,000 bags; quarter 2, 42,000 bags. Selling price is $60 per bag. Direct materials: Each bag of Snare requires 4 pounds of Gumm at a cost of $4 per pound and 6 pounds of Tarr at $1.50 per pound. Desired inventory levels: Type of Inventory January 1 April 1 July 1 Snare (bags) 8,000 12,000 18,000 Gumm (pounds) 9,000 10,000 13,000 Tarr (pounds) 14,000 20,000 25,000 Direct labor: Direct labor time is 15 minutes per bag at an hourly rate of $14 per hour. Selling and administrative expenses are expected to be 15% of sales plus $175,000 per quarter. Income taxes are expected 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 labor cost. (2) The direct materials budget for Tarr shows the cost of Tarr purchases to be $297,000 in quarter 1 and $439,500 in quarter 2. Complete the budgeted income statement for the first 6 months and all required supporting budgets by quarters. (Note: Use variable and fixed in the selling and administrative expense budget). (Round unit cost to 2 decimal places e.g. 25.75. Show time as a percent e.g. 45 minutes is .75. Enter all amounts as positive amounts and subtract where necessary.) ZELMER FARM SUPPLY COMPANY Sales Budget For the Six Months Ending June 30, 2012 Quarter Six 1 2 Months Expected unit sales Unit selling price $ $ $ Total sales $ $ $ ZELMER FARM SUPPLY COMPANY Production Budget For the Six Months Ending June 30, 2012 Quarter Six 1 2 Months Expected unit sales Add: Desired ending finished goods units Total required units Less: Beginning finished goods units Required production units ZELMER FARM SUPPLY COMPANY Direct Materials Budget-Gumm For the Six Months Ending June 30, 2012 Quarter Six 1 2 Months Units to be produced Direct materials per unit Total pounds needed for production Add: Desired ending direct materials Total materials required Less: Beginning direct materials Direct material purchases Cost per pound $ $ Total cost of direct materials purchases $ $ $ ZELMER FARM SUPPLY COMPANY Direct Labor Budget For the Six Months Ending June 30, 2012 Quarter Six 1 2 Months Units to be produced Direct labor time (hours) per unit Total required direct labor hours Direct labor cost per hour $ $ Total direct labor cost $ $ $ ZELMER FARM SUPPLY COMPANY Selling and Administrative Expense Budget For the Six Months Ending June 30, 2012 Quarter Six 1 2 Months Budgeted sales in units Variable $ $ $ Fixed Total $ $ $ ZELMER FARM SUPPLY COMPANY Budgeted Income Statement For the Six Months Ending June 30, 2012 Sales $ Cost of goods sold Gross profit Selling and administrative expenses Income from operations Income tax expense Net income $