P$22\mathrm{.}1($LO $2,3),$ AP Cook 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 $2025.$ Sales: quarter $1,40,000$ bags; quarter $2,56,000$ bags. Selling price is $$60$ per bag. Direct materials: each bag of Snare requires $4$ pounds of Gumm at a cost of $$3\mathrm{.}80$ per pound and $6$ pounds of Tarr at $$1\mathrm{.}50$ per pound. Desired inventory levels: Direct labor: direct labor time is $15$ minutes per bag at an hourly rate of $$16$ per hour. Selling and administrative expenses are expected to be $15\%$ of sales plus $$175,000$ per quarter. Interest expense is $$100,000$ for the $2$ quarters. 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 $$297,000$ in quarter $1$ and $$439,500$ in quarter $2.$ Instructions Prepare the budgeted multiple$-$step income statement for the first $6$ months and all required operating budgets by quarters. $($Note: Use variable and fixed in the selling and administrative expense budget.$)$ Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr. Net income $$1,007,040$ Cost per bag $$33\mathrm{.}20$

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Schedule$-$Standard Cost Per Bag

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