The sales department of Donovan Manufacturing, Inc has completed the following sales forecast for the months January through March 20X1 for its only two products: 50,000 units of J to be sold at $90 each and 30,000 units of K to be sold at $70 each. The desired unit inventories at March 20X1, are 10% of the next quarters unit sales forecast, which are 60,000 units of J and 30,000 units of K. The January 1, 20X1 unit inventories were 5,000 units of J and 2,000 units of K. Each unit of J requires 3 pounds of material A and 2 pounds of material B for its manufacture; K requires 2 pounds of A and 4 pounds of B. the purchase cost of A is $9 per pound and the purchase cost of B is $5 per pound. Materials A and B on hand at January 1, 20X1 were 19,000 pounds of A and 7,000 pounds of B. Desired inventories at March 31, ,20X1 are 14,000 pounds of A and 8,000 pounds of B. Each unit of J requires .5 hours of direct labor in the factory; each unit of K requires 1.0 hour of direct labor. The average hourly rate for direct labor is $12.00 per hour. Estimated manufacturing overhead cost is $6 per direct labor hour plus $90,000 per month. Selling and administrative expenses are estimated to be 10% of sales revenue plus $180,000 per month.

Cash Sales for the first quarter estimated to be $300,000 per month. It is forecast that 30% of the credit sales for the quarter ended March 31, 20X1 will occur in January, 30% in February, 40% in March. Of credit sales *Dec through March*, 40% will be collected as cash in the month of sale and 55% will be collected the following month. The remainder will be uncollectable. Cash collected in January 20X1, from December 20X0 sales will be $1,050,000.

The January 1, 20X1 cash balance was $70,000. The minimum acceptable cash balance at the end of each month is $60,000. Short-Term borrowings borrowings (6-month term) are made in multiples of $10,000. Interest rate of 1% per month on short term borrowing. The fist interest payment is made in the month following the borrowing. Cash disbursements (excluding interest on short-term borrowings) are estimated