1. You are the management accountant for Rio plc, a retail business which has started operations on January 1. You have been given the following pieces of information: Budgeted sales Budgeted Budgeted (units) labour cost expenses January 10,000 50,000 12,000 February 12,000 50,000 15,000 March 30,000 70,000 9,800 April 40,000 80,000 10,200 May 50,000 80,000 9.600 Each unit is bought for 20 and sold at 25. Purchases are made in the month of sale. Suppliers for the units are paid 50% in the month of sale and 50% in the following month. Expenses are paid in the month after the expenses are incurred Rent of 50,000 per month is paid each month. Labour is paid in full by the end of the current month. Labour costs are always treated as period costs. Expenses include a monthly depreciation charge of 2,000. 75% of sales are made for cash and 25% of sales are made on one month's credit The company will sell its existing delivery lorry with a netbook value of 12,000 for the cash price of 6,000 in February. It will also buy a new delivery lorry costing 17,500 for cash in February The company will pay a dividend to shareholders of 75,000 in March The opening cash balance at 1 January is 1,000. Question Continued AC107 2019/20 A 800 Tum over Page 4 Required (a) Prepare a cash budget for the 5 months, January to May. showing net cash receipts and cash purchases. (27 marks) (b) Comment on the company's cash position and any measures they should take to manage this