(a) Canakiah Builders Ltd supplies building material. The directors are proposing to purchase a computer system that will provide electronic recordings of sales and stock. The directors have obtained the following estimate prices for the computer system. Details Rs Terms Computer hardware 30,000 A deposit of 25% payable in July, the remainder Payable in September Computer software 3,750 Payable in August Set-up and training costs 4,750 Payable in August Annual maintenance contract 3,000 The contract is paid in equal monthly instalment starting in August. Additional information. 

1. Forecasts for: June July August September Sales 50,000 44,000 72,000 66,000 Purchases of materials 22,500 36,000 33,000 28,500 Operating expenses 10,500 11,500 12,750 11,250. 

2. Sales are made on the basis of 60% cash and 40% credit. Credit customers are expected to pay one month after the sale. 

3. Purchases of materials will be paid one month after purchase. 

4. Operating expenses will be paid in the month they are incurred. 

5. Depreciation of fixed assets is estimated to be Rs 1250 per month. 

6. The directors intend to pay an interim dividend of Rs 27 550 in August. 

7. The directors have negotiated an overdraft facility of Rs 20 000. 

8. The bank balance at 30 June is estimated to be Rs 400 overdrawn. 

REQUIRED 

(i) Prepare a cash budget for each of the three months, July, August and September, assuming the directors purchase the computer system. 

(ii) Briefly state the objectives of preparing Cash Budget.  

(b) Critically assess the use of Zero-Based Budgeting as a tool that might be used to motivate employees.