Garneau Manufacturing Ltd. produces and distributes a special type of chemical compound called Compound WX. The information below about Garneau's operations has been assembled to assist budget preparation. The company is preparing its master budget for the first quarter of 2016. The budget will detail each month's activity and the activity for the quarter in total. The master budget will be based on the following information: a. Selling price is $60 per unit in 2015 and will not change for the first two quarters of 2016. Actual and estimated sales are as follows: Estimated 2016 January: 11000 units February: 10.000 units March: 13.000 units Aprit 11000 units May: 10,000 units b. The company produces enough units each month to meet that month's sales plus a desired inventory level equal to 20% of next month's estimated sales. Finished Goods inventory at the end of 2015 consisted of 2,200 units. The company uses a FIFO method for Finished Goods Inventory Management. C. The company purchases enough raw materials each month for the current month's pro- duction requirement and 25% of next month's production requirements. Each unit of product requires 5 kilograms of raw material at $0.60 per kilogram. There were 13,500 kilograms of raw materials in inventory at the end of 2015. Garneau pays 40% of raw material purchases in the month of purchase and the remaining 60% in the following month. d. Each unit of finished product requires 1.25 labour-hours. The average wage rate is $16 per hour. C. Variable manufacturing overhead is 50% of the direct labour cost. f. Sales are 40% in cash and 60% in credit. Credit sales are collected in the month following sale. Fixed overhead costs (per month) are as follows: Factory supervisor's salary .. $75.000 Factory insurance.... 1400 Factory rent...- 8.000 Depreciation of factory equipment 1200 h. Total fixed selling and administrative expenses are as follows: Advertising ....- . ..- $ 300 Depreciation. .. 9.000 Insurance. . 250 Salaries. 4000 Other. .... . . .- 14550 i. Variable selling and administrative expenses consist of $4 for shipping and 10% of sales for commissions. j. The company will acquire assets for use in the sales office at a cost of $300,000, which will be paid at the end of January 2016. The monthly depreciation expense on the additional capital assets will be $6,000