Animal Feeds Plus Ltd has been recently incorporated with issued share capital of

$250,0001$ ordinary shares. The company commenced to trade on $1$ January $2016.$

The company has compiled some financial information to aid their budgeting process

and has provided the following detail:

It is estimated that $30,000$ tonnes of product will be sold in each of the first two

months of trading. Sales will increase to $55,000$ tonnes for the following one

month and to $65,000$ tonnes thereafter.

The selling price per unit is budgeted at $35\mathrm{.}00$ per tonne and the company

anticipates that sales will be paid for one month after the date of sale.

There will be no opening stocks on hand at $1$ January $2016$ and the company's

policy will be to purchase one tonne of stock for each tonne of sales expected.

Stocks will be maintained at a level equal to the planned sales $($tonnage$)$ of the

following month.

One tonne of stock can be purchased at a cost of $11\mathrm{.}50$ per tonne. However it

is expected that the supplier will increase the cost to $14\mathrm{.}00$ per tonne on $1$

March $2016.$ Suppliers will provide one month's credit to the company.

Wages and overheads are budgeted as follows and all will be paid in the month

incurred:

Depreciation of $25,000$ is included in the overhead costs for each month.

A new machine costing $285,000$ will be purchased in February $2016$ and paid for

in March $2016.$

The company expects to obtain a loan of $150,000$ in March $2016.$ Loan

repayments of $5,000$ per month will commence in April $2016.$

a$)$ For each of the four months January $2016$ to April $2016$ prepare:

i$.$ A sales budget;

ii$.$ A materials purchase budget; and

iii. A cash budget.

b$)$ Briefly comment on any funding requirements the company may have over

the budget period.