Seuss Ltd manufactures and sells two products: ThingOne and ThingTwo. With the recent downturn in the market, Seuss experienced a decline in financial performance. The management team is in the process of preparing the 2018 budget and put together the following budgeted information. Annual sales are expected to be 5,000 units. Budgeted sales for the month of October and November 2018 are provided below (Table 1). All sales are on credit. Seuss Ltd expects to collect 40 percent of accounts receivable in the month of sale, 59% are collected the following month and 1% are never collected and are written off as bad debts. Seuss Ltd recorded sale revenue of $74,100 for ThingOne and $105,000 for ThingTwo during the month of September 2018. Table 1: Expected Sales in Units and Dollars for October and November 2018 ThingOneThingTwo Units Price Units Price October 250$280 160 $635 November 260 $270 200 $650 The annual production is expected to be 5,100 units. Table 2 identifies the material requirements per unit of output and material costs per kg. These costs are not expected to change during the budgeted period. Table 2: Budgeted Direct Materials-Inputs and Costs as at October 1, 2018 Cost Direct Material Required (in Kgs) per Unit per KgThingOne Material X $5.50 Material Y $13.00 Material Z $7.50 2.5 kg 3 kg 1.5 kg ThingTwo 5 kg 4 kg 3 k Beginning inventories of the respective direct materials are shown in Table 3. It is Seuss's policy to maintain an ending inventory equal to 20 percent of the current month's production Table 3: Direct Materials Inventory-as at October 1, 2018 Material X Material Y Material 2z ThingOne (Kgs) 125 300 220 Cost $625 $3,750 $1,584 ThingTwo (Kgs) 180 350 215 Cost $900 $4,935 $2,580