(2) Saddaqa Ltd manufactures and sells home designs. They have recently completed financial projections for the year ahead and they now require a cash budget to present to their Estate Director. The following information is provided to help with the calculation. Sales revenue is projected at D220,000 for the first month with 10% increase in the subsequent month. The opening debtors are valued at D110,000, 50% of sales are "cash and carry" with 2% discount to the customers. The remaining 50% is settled in the month after sales and bad debt is provided for at 5%. Each unit requires 4kg of raw materials and 1.5 hours of labour. The materials costs are estimated to be D3 per kg and D10 for labour hours. Purchases are budgeted at D70,000 for January and management projected a 5% increase in the subsequent months. The suppliers are paid 75% cash and the balance is settled in the month after purchase. Opening creditors are valued at D25000. Production overheads are estimated at D5000 and administrative overheads are projected at D3000 per month. sales and marketing and marketing cost are estimated at 5% of turnover and are paid in the month of sale. The company intends to purchase a new machine costing D130,000, which will be paid for in March. At the start of the year the company bank balance is overdrawn by D10, 400 Required: (a)Prepare a statement setting out monthly cash budgets for January, February, March and April. (b) to state two possible reasons for differences between profit and cash flow (25 marks).