kg of the raw material, which costs £1.50 per kg.

Raw materials are paid for in the month after purchase.

5 Labour and overheads The direct labour cost of each Zenith is £0.50. The variable overhead element of each Zenith is £0.30. Fixed overheads, including depreciation of £25,000, total £47,000 a month.

All labour and overheads are paid during the month in which they arise.

6 Cash in hand The business plans to have a bank balance (in funds) at 1 August of £20,000.

Required:

Prepare the following budgets:

(a) Finished inventories budget (expressed in units of Zenith) for each of the three months July, August and September.

(b) Raw materials inventories budget (expressed in kg of the raw material) for the two months July and August.

(c) Cash budget for August and September.