13 - All of the selling and administrative expenses are...

All of the selling and administrative expenses are fixed. Monthly fixed selling and administrative
costs, other than interest, amount to $43,600, of which $6,000 is depreciation. These operating
costs, excepting depreciation, are paid in cash in the month incurred. Manny has large tax loss
carry forwards from a previous unsuccessful business venture. Therefore, he does not expect to
pay any income taxes this year. (In other words you may ignore income taxes).
Manny plans to buy new equipment costing $80,000 during the month of June. This equipment
will be ready for use starting in July.
The budgeted selling price of valves for April, May, and June is $23 per valve. Because of
market competition there is not much flexibility to adjust the price and the price is expected to be
stable during the 2
nd
quarter. Manny budgeted sales in units for April at 17,000 units. For May he
expects to sell only 18,500 units. He has projected sales of 20,000 units for June and 18,000 units
for July.