The company sells many styles of earrings, but all are sold for the same price-$17 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings): January (actual) February (actual) Harch (actual) April (budget) May (budget) 22,600 June (budget) 28,600 July (budget) 42,600 August (budget) 67,600 102,600 September (budget) 52,600 32,600 30,600 27,600 The concentration of sales before and during May is due to Mother's Day. Sufficient inventory should be on hand at the end of each month to supply 40% of the earrings sold in the following month. Suppliers are paid $5.30 for a pair of earrings. One-half of a month's purchases is paid for in the month of purchase; the other half is paid for in the following month. All sales are on credit. Only 20% of a month's sales are collected in the month of sale. An additional 70% is collected in the following month, and the remaining 10% is collected in the second month following sale. Bad debts have been negligible. Monthly operating expenses for the company are given below: Variable:: Sales commissions Fixed: Advertising Rent Salaries Utilities 4% of sales $330,000 $ 31,000 $ 132,000 $ 13,500 $ 4,300 Insurance Depreciation $ 27,000