You have just been hired as a new management trainee by Earrings Unlimited, a distributor of earrings to various retail outlets located in shopping malls across the country. In the past, the company has done very ttle in the way of budgeting and at certain times of the year has experienced a shortage of cash. Since you are well trained in budgeting, you have decided to prepare comprehensive budgets for the upcoming second quarter in order to show management the benefits that can be gained from an integrated budgeting program. To this end, you have worked with accounting and other areas to gather the information assembled below The company sells many styles of earrings, but a are sold for the same price $13 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (n pairs of earrings) January (actual) 20,600 June (budget) 50,600 February (actual) 26,600 July (budget) 30,600 March (actual) 40,600 August (budget) 28,600 April (budget) 65,600 September (budget) 25,600 May (budget) 100,600 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 $4.3 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, with no discount, and payable within 15 days. The company has found, however, that 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 n the second month following sale. Bad debts have been negligible. Monthly operating expenses for the company are given below: Variable Sales commissions 4% of sales Fixed Advertising 230,000 Rent 21,000 Salaries 112,000 Utilities, 8,500 3,300 nsurance Depreciation 17,000 nsurance is paid on an annual basis, in November of each year. The company plans to purchase $17,500 in new equipment during May and $43,000 in new equipment during June; both purchases will be for cash. The company declares dividends of $17,250 each quarter payable in the first month of the following quarter A listing of the company's ledger accounts as of March 31 is given below: Assets Cash 77,000 Accounts receivable ($34,580 February sales $422,240 March sales 456,820 Inventory 112,832 Prepaid insurance 22,500 Property and equipment (net) 980,000