Please answer questions 3-7.

Selling Price per Unit $48 Purchase Price per Unit $20 Sales Types Cash Sales (% of Total Dollar Sales) 25% -Account Sales (% of Total Dollar Sales) 30% Account % Total Sales Collections of Sales on Account Sales - Current Month 10% 3.00% - Month Following 30% 9.00% - Second Month Following 40% 12.00% - Third Month Following 15% 4.50% Credit Card Sales (% of Total Dollar Sales) 45% - Credit Card Fee (variable cost) 3% Monthly Inventory Holding Cost (% Monthly Purchases, cash, variable cost) 0.50% Selling Commissions (% Sales) 8% Monthly General and Adminstration Expenses $45,000 Monthly Advertising $20,000 Monthly Depreciation $10,000 Accounts Payable (Disbursements) for Purchases -Paid in month of purchase 75% - Paid the following month 25% Purchases - Purchases of the Expected Sales Units Requirements in the Current Period 20% - Purchases of the Expected Sales Units Requirements in the Next Period 30% Minimum Cash Balance $25,000 Opening Cash Balance $50,000 Opening Line of Credit Balance Line of Credit Monthly Interest (paid the following month on ending balance, noncash) 2% October November December January February March April May June July August September October November December January Sales (units) 14,222 15,085 13,993 12,398 13,457 16,779 17,600 18,455 19,860 18,600 16,406 14,017 17,028 16,202 15,687 16,009Kim's novelties (KN) sells a line of stuffed toys that it purchases from aa supplier. The exhibit on The following page break provides the expected sales in units for the upcoming year, information on various expense items, purchasing and accounts payable policies, the distribution of sales types, expectations regarding collection of non-cash sales, and minimum cash balance requirements and financing options. This information is also available in a separate spreadsheet (template). Required: Executives at KN ask your team to develop operating and financial budgets for the first quarter (i.e., the month of January February and March) that include cash flow projections and estimates of income if expectations are realized. More specifically: 1. develop a sales budget end unit and in dollars for KN for the first quarter (for each month and a quarterly total). (0.5 marks) 2. develop a purchasing budget in dollars in units for KN but the first quarter (for each month and quarterly total). (0.5 marks) 3. develop a full cash budget for KN (including cash collections, cast Sportsman's, financing2. develop a purchasing budget in dollars in units for KN but the first quarter (for each month and quarterly total). (0.5 marks) 3. develop a full cash budget for KN (including cash collections, cast Sportsman's, financing, and cash balances) for the fourth quarter (for each month and quarterly total). (2 marks) 4. What would KN's quarterly total income be for the first quarter? (assume we ignore bad debt expense). (1 mark) Questions 5, 6, and 7 are independent from one another: 5. The marketing manager believes that if selling commissions were increase to 10% of sales, unit sales would increase by 10%. a) with these changes increase or decrease the expected income in the first quarter (relative to the Baseline computed in question 4), and by how much? (0.5 marks) b) changes would affect the expected cash balances in the first quarter frenzies relative to the Baseline computed in question 3). (0.5 marks) 6. The marketing manager believes that high-quality product, which would cost $22 per unit would increase unit sales by 20%. The same time, purchases payment would also change and be 50% in the month of the purchase and the rest in the following month. a) with these changes increase or decrease the expected income in the first quarter from deceased relative to the Baseline computer and question 4), and by how much? (0.5 marks) comment on how these changes would affect the expected cash balances in the first quarter (relative to the Baseline computed in question 3). (0.5 marks) 7. The marketing manager believes that increasing monthly advertising to $22,000 a month would increase sales volume by 5%. a) with these changes increase or decrease the expected income in the first quarter from deceased relative to the Baseline computer and question 4), and by how much? (0.5 marks) b) comment on how these changes would affect the expected cash balances in the first quarter (relative to the Baseline computed in question 3). (0.5 marks)