Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: . Sales are budgeted at $248,000 for November, $268,000 for December, and $220,000 for January. Collections are expected to be 60% in the month of sale and 40% in the month following the sale. The cost of goods sold is 75% of sales. The company desires to have an ending merchandise inventory at the end of each month equal to 70% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase. Other monthly expenses to be paid in cash are $17,500. Monthly depreciation is $20,000. Ignore taxes. Balance Sheet October 31 Assets Cash $ Accounts receivable Merchandise inventory Property, plant and equipment, net of $624,000 accumulated depreciation Total assets 20,000 79,500 130,200 976,000 1,205,700 $ $ Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity 244,000 745,000 216,700 1,205,700 $ Retained earnings at the end of December would be: Bartosiewicz Clinic uses client-visits as its measure of activity. During January, the clinic budgeted for 4,800 client-visits, but its actual level of activity was 4,880 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for January: Data used in budgeting: Fixed element per month Variable element per client-visit $ 36.90 Revenue $ $ Personnel expenses Medical supplies Occupancy expenses Administrative expenses Total expenses 28,900 1,800 10,800 7,900 49,400 12.90 6.90 1.00 0.50 $ $ 21.30 Actual results for January: Revenue $ 134,000 Personnel expenses $ 70,050 Medical supplies $ 21,018 Occupancy expenses $ 14,260 Administrative expenses $ 8,110 The activity variance for net operating income in January would be closest to