A new company, is being established to manufacture and sell an electronic tracking device: the Trackit. The owners are excited about the future profits that the business will generate. They have forecast that sales will grow to 2,600 Trackits per month within five months and will be at that level for the remainder of the first year. The owners will invest a total of $250,000 in cash on the first day of operations (that is the first day of July). They will also transfer non-current assets into the company.

Extracts from the company's business plan are shown below.

Sales

The forecast sales for the first five months are:

\fnine of payment 5E of sales value Immediately 15 " One month later 25 Two months later 4D Three months later 15 The balance represents anticipated bad debts. * A 4% discount will be given for immediate pay ment Production The budget production volumes in units are: July August September October 1.4513 1.55!) 2.1211] 2.491} Variable production cost The budgeted variable production cost is $90 per unit, comprising: S Direct materials 60 Direct labour 10 Variable production overheads 20 Total variable cost 90