You have just been hired as a new management trainee by Earrings Unlimited, a distributor of earrings to varlous retall outlets located in shopping malls across the country. In the past, the company has done very little in the way of budgeting and, at certain times of the year, has experlenced a shortage of cash. Because you are well trained in budgeting, you have decided to prepare a master budget for the upcoming second quarter. 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 all are sold for the same price$-$ $$16$ per palr. Actual sales of earrings for the last three months and budgeted sales for the next sIx months follow $($in palrs of earrings$)$:

$\backslash$table$[[$January $($actual$),22,400,$June $($budget$),52,400],[$February $($actual$),28,400,$July $($budget$),32,400],[$March $($actual$),42,400,$August $($budget$),30,400],[$April $($budget$),67,400,$September $($budget$),],[$May $($budget$),102,400,,27,400]]$

The concentration of sales before and during May is due to Mother's Day. Sufficlent Inventory should be on hand at the end of each month to supply $40\%$ of the earrings sold in the following month.

Suppllers are pald $$5\mathrm{.}20$ for a pair of earrings. One$-$half of a month's purchases is pald for in the month of purchase; the other half is pald 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 $70\%$ are collected in the following month, and the remaining $10\%$ are collected in the second month following sale. Bad debts have been negligible.

Monthly operating expenses for the company ardiven below: