Cook Farm Supply 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, 40,000 bags; quarter 2, 56,000 bags. Selling price is $60 per bag.
2. Direct materials: each bag of Snare requires 4 pounds of Gumm at a cost of $3.80 per 6 pound and 6 pounds of Tarr at $1.50 per pound.
3. Desired inventory levels:

Type of Inventory January 1 April 1 July 1
Snare (bags) 8,000 15,000 18,000
Gumm (pounds) 9,000 10,000 13,000
Tarr (pounds) 14,000 20,000 25,000

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 $175,000 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 $297,000 in quarter 1 and $439,500 in quarter 2.

Required
Prepare the budgeted multi-step income statement for the first 6 months and all required operating budgets by quarters.