1) Calculate cash budget for August and September. (10 marks) 2) Comment on the cash balance for August and September. (9 marks)

Excel Berhad manufactures one product line - the Nexus. Sales of Nexus over the next few months are planned as follows: 1. Demand: July 180,000 units, August 200,000 units, September 240,000 units, October 180,000 units. The selling price for each Nexus is RM5. 2. Debtor receipts: Credit customers (receivables) are expected to pay as follows: 70% during the month of sale and 28% during the following month. The remaining credit customers are expected to go bad (that is, to be uncollectable). Credit customers who pay in the month of sale are entitled to deduct a 2 per cent discount from the invoice price. 3. Finished goods inventories: Inventories of finished goods are expected to be 50,000 units at 1 July. The business's policy is that, in future, the inventories at the end of each month should equal 20 percent of the following month's planned sales requirements. 4. Raw materials inventories: Inventories of raw materials is expected to be 50,000kg on 1 July. The business's policy is that, in future, the inventories at the end of each month should equal 50 percent of the following month's planned production requirements. Each Nexus requires 0.5kg of the raw material, which costs RM1.50 per kg. Raw materials are paid for in the month after purchase. 5. Labour and overheads: The direct labour cost of each Nexus is RM1.00. The variable overhead element of each Nexus is RM0.50. Fixed overheads, including depreciation of RM15,000, total RM50,000 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 RM20,000. Required