Instructions:

Prepare the budgeted income statement for the first six months and all required 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.Managerial Accounting, $6$th Canadian Edition, by Weygandt, Kieso, Kimmel and Aly

"Group Project 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 $2025.$

$\backslash$table$[[1.$ Sales:,Quarter $1,28,000,$bags,,Quarter $2,42,000,$bags,$],[,$Selling price per bag,$$60,,,,,],[2.$ Direct materials: Each bag of Snare requires,$4,$kilograms of Gumm at a cost of$,$$$4\mathrm{.}00,$per kilogran$],[6,$kilograms of Tarr at$,$$$1\mathrm{.}50,$per kilogram.,,,,$],[3.$ Desired inventory levels:$],[,,$Type of Inventory,January $1,$April $1,$July $1,,],[,,$Snare $($bags$),8,000,12,000,18,000,,],[,,$Gumm $($kilograms$),9,000,10,000,13,000,,],[,,$Tarr $($kilograms$),14,000,20,000,25,000,,],[4.$ Direct l$,$our: Direct lab,ur time is$,15,$minutes per bag at an hourly rate of$,$$$14\mathrm{.}00,],[5.$ The company expects selling and administrative expenses to be$,15\%,$of sales plus,$$175,000,$per quarter.$]]$

It expects income taxes to be $30\%$ of the income from operations.

Your assistant has prepared two budgets: $(1)$ The manufacturing overhead budget shows expected costs to be

labour cost. $(2)$ The direct materials budget for Tarr shows the cost of Tarr purchases to be

$$297,000$

$150\%$ of the direct $$439,500$ in quarter $2.$