● Customers will pay in the month of sale, in the case of sales to the motor manufacturer, and the month after sale, in the case of retail sales. Retail sales during December were 2,000 units at £12 each.

Required:

Prepare the following budgets in monthly columnar form, both in terms of money and units

(where relevant), for the six months of January to June inclusive:

(a) Sales budget.*

(b) Finished inventories budget (valued at direct cost).†

(c) Raw materials inventories budget (one budget for each component).†

(d) Production budget (direct costs only).*

(e) Trade receivables budget.†

(f ) Trade payables budget.†

(g) Cash budget.†

* The sales and production budgets should merely state each month’s sales or production in units and in money terms.

† The other budgets should all seek to reconcile the opening balance of inventories, receivables, payables or cash with the closing balance through movements of the relevant factors over the month.