The management of Nabar Manufacturing prepared the following estimated balance sheet for June 2017: NABAR MANUFACTURING Estimated Balance Sheet June 30, 2017 Assets Liabilities and Equity Cash Accounts receivable Raw materials Inventory $ 40,000 249,900 35,000 Accounts payable Income taxes payable.. $ 51,400 10,000 Short-term notes payable 24.000 Finished goods inventory 241,080 Total current liabilities 85,400 Total current assets.. 565,980 Long-term note payable 300,000 Equipment.... 720,000 Total liabilities. 385,400 Accumulated depreciation (240,000) Common stock 600,000 Equipment, net... 480,000 Retained earnings 60,580 Total assets... $1,045,980 Total stockholders' equity Total liabilities and equity 660,580 $1,045,980 To prepare a master budget for July, August, and September of 2017, management gathers the following information: a. Sales were 20,000 units in June. Forecasted sales in units are as follows: July, 21,000; August, 19,000; September, 20,000; and October, 24,000. The product's selling price is $17 per unit and its total product cost is $14.35 per unit. b. Company policy calls for a given month's ending finished goods inventory to equal 70% of the next month's expected unit sales. The June 30 finished goods inventory is 16,800 units, which does not comply with the policy. c. Company policy calls for a given month's ending raw materials inventory to equal 20% of the next month's materials requirements. The June 30 raw materials inventory is 4,375 units (which also fails to meet the policy). The budgeted September 30 raw materials inventory is 1,980 units. Raw materials cost $8 per unit. Each finished unit requires 0.50 units of raw materials. d. Each finished unit requires 0.50 hours of direct labor at a rate of $16 per hour. e. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $2.70 per direct labor hour. Depreciation of $20,000 per month is treated as fixed factory overhead. f. Monthly general and administrative expenses include $9,000 administrative salaries and 0.9% monthly interest on the long-term note payable.