Varmit-B-Gone is a pest control service that operates in a suburban neighborhood. The company attempts to make service calls at least once a month to all homes that subscribe to its service. It makes more frequent calls during the summer. The number of subscribers also varies with thseason. The number of subscribers and the average number of Calls to each subscriber for the months of interest follow. Service calls (per subsariber) 0.6 0.9 1.5 2.5 3.0 2.4 March April May 1,250 1,350 2,050 2,250 2,250 1,500 une July August The average price charged for a service call is $80. Of the service calls, 30 percent are paid in the month the service is rendered, 60 percent in the month after the service is rendered, and 8 percent in the second month after. The remaining 2 percent is Varmil-B-Gone estimates that the number of subscribers in September should fall 10 percent below August levels, and the number of service calls per subscriber should decrease by an estimated 20 percent. The following information is available for costs incurred in August. All costs except depreciation are paid in cash. Service costs $17,000 Variable costs Maintenance and repair Depreciation fxed) 15,000 67,000 24.000 72,000 $139,000 Total Marketing and adminislrative casts Marketing (variable) Administrative (ixed) Total Total costs Variable service and marketing costs change with volume. Fixed depreciation will remain the same, but foxed administrative costs will increase by 5 percent beginning September 1. Maintenance and repair are provided by contract, which calls for a 1 percent increase in September