0 Flower Power Corp. is a merchandising company that sells one product. It sells at $20 per unit and sells best leading up to Valentine's Day and Mother's Day. As a result peak sales occur in February, April and May of each year. Budgeted sales in units for the first six months of the coming year are: Month January February March April Units 12,000 32,000 18,000 35,000 30,000 15,000 May June 25% of all sales are cash sales and the rest are on account. Past experience shows that the company collects 25% of a month's credit sales in the month of sale. Another 65% of credit sales is collected in the month following sale, and the remaining 10% of credit sales is collected in the second month following sale. Bad debts are negligible and can be ignored. To ensure that sales volumes can be met, the company manages the purchases of the product such that ending inventory for a particular month reflect 15% of next month's sales. Assume June 30 closing inventory will be 1,500 units. The average purchase price is forecasted to be $12 per unit. 50% of purchases made are paid for in the month of purchase and the remaining 50% is paid for in the month following purchase. Assume that the cash balance at the end of March will be $ 10,000 In addition to product costs, the company anticipates the following annual operating expenses. Assume the operating expenses are paid when incurred except as noted below and are incurred evenly throughout the year except wages which are expected to be twice as high in February, April and May (peak selling times) as they are in other months. Rent Wages Insurance Other 114,000 paid at the beginning of every month 660,000 49,800 paid quarterly at the beginning of each quarter 184,000 includes $40,000 in depreciation charges Total Operating Expense $1,007,800