1. The garden supply company has the following business transaction estimates relating to the final quarter of 2020. October November December $ $ $ Total Sales - See note 1. 110,000 140,000 160,000 Receipts from Accounts Receivable To calculate - See note 2. Wages 35,000 35,000 40,000 Office Furniture 0 10,000 0 Lease Prepayment for 2021 0 0 6,000 Administrative Expenses 5,000 5,000 7,000 Accrued Expenses 0 0 8,000 Depreciation on Office Furniture 8,000 9,000 9,000 Maturing of Term Deposit 10,000 0 0 Credit Purchases 60,000 70,000 80,000 Payments of Accounts Payable To calculate - See note 3. Drawings 3,000 3,000 3,000 Notes 1. 30% of total sales are cash sales. 70% of total sales are on credit. 2. Actual receipts from Accounts Receivable are 80% of the previous month's credit sales and the balance of 20% owing is received in the following month. For example if we had credit sales of $100,000 in January, we would expect to receive $80,000 in February and $20,000 in March. Actual credit sales were $60,000 in both August and September 2020. 3. Credit purchases on Accounts Payable are paid 60% in the month of purchase and the remaining 40% in the month following. Credit purchases in September 2020 were $50,000. 4. Garden Supply's cash balance at 1 October 2020 was $555. Required Prepare a month by month cash budget for the quarter ending 31 December 2020 and comment briefly on the monthly cash position. 2. The garden supply company is introducing various aged trees to their product range in 2021. They have provided the following information relating to its planned activities. year old 2 years old 3 years old Selling price $15 $24 $40 Variable cost/unit $10 $16 $25 Expected Sales Volume 25,000 15,000 10,000 Total fixed cost = $200,000 Required a. Calculate the contribution margin, sales mix and weighted average contribution margin for each product. b. Calculate the break-even point in total units and units per product based on the data. c. Management is now considering increasing the price of 1 year old trees to $17 with an expected drop in volume to 15,000 trees while lowering the price of 3 year old trees to $35 with an expected increase in volume to 20,000 trees. There would be no change to the price and sales volume of 2 year old trees. Implementing this initiative would increase annual fixed costs by $10 000. On the available data, would you recommend the initiative? 3. The garden supply company is also considering taking out a loan and buying a small truck to save costs on deliveries. The truck costs $65,000 and is expected to earn end of year after tax net cash inflows of $10000, $15000, $20000 and $25000 for the next four years before it wears out sufficiently to be unreliable and must be sold for an estimated $15000 (after tax). Required a. Calculate the NPV of the truck if the interest rate on the loan is 5% pa. b. Calculate the NPV of the truck if the interest rate on the loan is 10% pa. c. Advise management of your recommendation regarding purchase of the truck based on your NPV calculations. d. What additional advice would you give management if the required payback period was three years