3. Furniture Island manufactures customised dining tables and is in the process of preparing its budgets for the next quarter (April, May and June). To date the following budgeted information has been compiled for one of its popular products "Mode': Mode Budgeted sales (units) April 3,000 May 5,500 June 3,500 July 4,000 Budgeted selling price per unit: E80 80% of sales are on credit. Credit terms are strictly 30 days. 1% of all sales will result in bad debt. Trade receivables outstanding at 315 March were 65,000 (which are all collectable in April). The standard material usage for one unit of Mode is as follows: Mode Material X (kilogrammes) 3 kg Material planner has provided the following information: Material X Mode Opening inventory 1,000 kg 1,200 units (April) Closing inventory 1,800 kg X (June) Purchase price (per E2.50 X kilogramme)All purchases are paid in the same month to the supplier. Management have decided closing stock at the end of each month should be as follows: Raw materials: 10% of the next month's usage Finished goods: 10% of the next month's sales. Overheads Fixed overheads are estimated at $5,000 per month and are paid in the month they were incurred. $1,500 of this amount relates to depreciation. Insurance of $12,500 is due to be paid in April. Capital Expenditure April: Computer E148,000 May: Delivery van E280,000 June: Additional Delivery van E230,000 Corporation Tax of $35,900 is due to be paid in May The opening bank balance is $43,500 overdrawn. Required: a) Prepare the following budgets for April, May and June: (i) Sales Budget (3 marks) (ii)Production Budget in units (3 marks) (iii) Materials Purchases Budget (6 marks) b) Prepare the Cash Budget for the 3 months period. (9 marks) c) Recommend to the management of Furniture Island at least three ways of improving their cash position. (4 marks)d) Critically explain the benefits and limitations of traditional budgeting systems. Suggested word count permitted is 400. Where appropriate include the bibliography at the end of this question, bibliography is not included in the word count. (10 marks) (Total marks = 35 marks)