Novak Towel Company completely stocked out of its cotton yarn for making towels in April (last month). So management is starting over, trying to build up an inventory of yarn while ensuring there is enough yarn on hand for the production group to catch up with orders. Phyllis is responsible for putting all operating budgets together to estimate operating income for May. Here is the information she has. May June July Budgeted sales in unit 6,500 5,600 5,200 Additional information: Budgeted selling price Target ending FG Inventory Beginning FG Inventory Target ending DM Inventory Beginning DM Inventory Budgeted DM usage and cost Budgeted DL usage and cost Budgeted Variable MOH costs Budgeted Fixed MOH costs Budgeted variable SG&A costs Budgeted fixed SG&A costs $6 per unit 15% of next month's sales volume 290 units, at a total cost of $1,090 (based on prior period costs) 20% of next month's production needs 0 25 yards per unit at a cost of $0.04 per yard 0.1 DL hours per unit at a cost of $14 per hour $0.50 per unit $5,500 total (including $550 of depreciation) $0.40 per unit sold $7,600 total (including $750 of depreciation)