Case 10.2 Abruzzi Olive Oil Company (LO1) The Abruzzi Olive Oil Company is a small producer of premium olive oil. Cheryl Sounders, the owner of Abruzzi, is currently developing a budget spreadsheet to explore the impact of various sales goals on production. In 2020, the company had monthly sales as follows: Month Sales (gallons) January 9,200 February 9,000 March 9,400 April 8,600 May 8,000 June 8,500 July 8,200 August 7,500 September 8,900 October 9,300 November 9,200 December 9,600At a planning meeting in November 2020, Jay Peters, the marketing manager for Abruzzi, told Cheryl that he expected monthly sales to increase by 5 to 15 percent in the coming year. But in late December 2020, Jay rushed into Cheryl's ofce with some good news. \"Cheryl, I just had a meeting with Consolidated Restaurants, and they're considering an order for 1,250 gallons each month for all of 2021.\" \"Gosh,\" Cheryl replied, \"that's an exciting bit of news, but I'm concerned about whether we have the capacity to accept such a large order. I'll prepare budgets assuming we don't get the Consolidated business but we increase monthly sales by 5, 10, or 15 percent. Then I'll assume the Consolidated order comes through, and on top of that we have monthly sales increases of 5, 10, and 15 percent. This should give us a good idea of whether we'll bump up against capacity.\" Jay thought that this sounded ne, but he wondered whether Cheryl had the time to do this much work. Cheryl indicated that the analysis was relatively easy since she was preparing the budget on a spreadsheet and each analysis would require only a simple change. Required a. Using a spreadsheet, prepare the six monthly budget schedules that Cheryl suggested (i.e., monthly budgets with and without the Consolidated business assuming other sales increases of 5, 10, and 15 percent). As a general rule, Cheryl likes to have ending inventory equal to 12 percent of next month's sales. Assume that the company ended 2020 with an inventory of 1,500 gallons of olive oil. In order to calculate ending inventory at the end of December 2021, assume that sales in January 2022 will be the same as December 2021 sales. b. Suppose that capacity is 12,000 gallons. Is the company likely to encounter a capacity problem? u g. c. Abruzzi sells its oil for $25 per gallon. The variable cost per gallon is $10. What will be the annual impact on prot of obtaining the Consolidated business (assuming that there is no capacity problem)