$12.$ Kumekucha Fashions Ltd $($KFL$)$ has a seasonal sales pattern, with high sales in the second quarter of the year. They also experience a minor sales peak in December due to a special contract with a customer in the Europe. It is the beginning of January $2019.$ The sales pattern for the coming eight months, together with the sales for the past quarter, is shown in the table below $($in million shs$)$:

October $100$ April $150$

November $120$ May $200$

December $180$ June $240$

January $150$ July $162$

February $120$ August $120$

March $140$

KFL$\text{'}$s terms of sale are $2/30$ net $60.$ Their actual experience of collections is that $30$ percent of customers take the discount, $60$ percent pay in $60$ days and $10$ percent pay in $90$ days. Bad debts have never exceeded $0\mathrm{.}2$ percent of sales.

Production costs, equal to $60$ percent of expected sales, consist of labour $(25$ percent of expected sales$)$ and bought out materials $(35$ percent of expected sales$).$ Labour is paid in the same month as the labour expense is incurred. Materials are paid for in the second month following purchase.

Office salaries of Tshs $30$m are paid in the month they are incurred. Staffs get a double cheque at Christmas time. Depreciation on fixed assets is Tshs $5$m per month. Other expenses, expected to remain at Tshs $22$m for the whole year, are paid in the month following that in which they are incurred.

The firm's term loan, which at the end of December $2018$ stood at Tshs $300$m attracts interest at a fixed rate of $16$ percent per annum, calculated quarterly. The loan, which is being repaid in equal quarterly installments, has $6$ years to run.

In May the firm will be buying a new computer, for Tshs$15$m$.$ KFL estimates its second provisional tax payment, due in February will be Tshs $20$m$.$ Its next payment, expected to be Tshs $23$m$,$ will be at the end of August. The firm's tax rate is $30$ percent.

You are a son$/$daughter of KFL$$s owner and you have just graduated with your MBA from the UDBS. Your daddy is getting worried that with the recent growth in the firm and thinks that cash may run out in the near future. He asks you to prepare a cash budget through to the end of August.

While you are in his office, the production manager, Ignatius Mailula drops in$.$ He has come to complain about the difficulty of running a factory that produces seasonally. He says he has to let staff go in the quiet periods and has difficulty finding experienced people for the busy months. He wants to switch from seasonal production, where goods are made to order, to level production, where the manufacturing for the anticipated sales for the coming year are spread evenly across the year.

You immediately point out that this may have cash flow implications, but Ignatius, not having any financial knowledge cannot understand what you are getting at$.$ Your father therefore asks you to redo the cash budget for the eight$-$month period based on the assumption of level production.