+ Saved budget for the quarter: a. Budgeted monthly absorption costing income statements for July to October are as follows: Homepage - Algon... Photo - G Help S Sales July $53,000 August $83,000 September October Cost of goods sold $63,000 $58,000 29, 200 47,200 35,200 32,200 Gross margin 23,800 35,800 27,800 25,800 Selling expense 48 Selling and administrative expenses: Administrative expense Net operating income 11, 100 14,300 9,800 8,600 6,300 8,500 7,400 7,200 Total selling and administrative expenses 17,400 22,800 $ 6,400 $13,000 17,200 $10,600 15,800 $10,000 *Includes $2.650 depreciation each month. b. Sales are 20% for cash and 80% on credit. c. Credit sales are collected over a three-month period, with 10% collected in the month of sale. 70% in the month following sale, and 20% in the second month following sale. May sales totalled $43,000, and June sales totalled $49,000. d. Inventory purchases are paid for within 15 days. Therefore, 50% of a month's inventory purchases are paid for in the month of purchase. The remaining 50% are paid in the following month. Accounts payable for inventory purchases at June 30 total $18.200. e. The company maintains its ending inventory levels at 75% of the cost of the merchandise to be sold in the following month. The merchandise inventory at June 30 is $24,500. f. Land costing $5,150 will be purchased in July.