Arisa Limited, a well-established skincare company, has developed a new skincare product called "Glow" and has negotiated a deal to supply the leading pharmacy group in Ireland. A new operational branch will be created to manufacture and sell this product. The expected sales for the first five months of this business are: June July August Sep Oct Expected Sales Units 2,000 2,200 2,400 2,500 2,600 Each unit will sell for 10 and two months' credit will be granted to the pharmacy group. At the end of each month an inventory of finished goods equal to 60% of the following months' projected sales should be maintained. Each unit requires raw materials which cost 3 per unit. Closing inventory of 50% of the raw materials required for the following month's production is to be held at the end of each month. The raw materials supplier grants the company one month's credit on each order. In order to commence production, a machine costing 40,000 must be purchased in June. It will be paid for immediately. The Glow Branch will rent premises for 3,000 a month. Rent is payable on the first of each month and a deposit of 6,000 is also due in June. An inter-company loan of 100,000 will be drawn down on 2 June, with the first loan repayment of 1,500 (comprising 1,400 capital and 100 interest) falling due on 2 August. The company will have a NIL bank balance on 1 June. ...question 3 continued. Wages and salaries are expected to be 5,000 per month. Overheads are expected to be 3,000 per month of which 1,000 relates to depreciation on the machine. Required: a) Prepare the following budgets for June, July and August: 1. Sales receipts budget II. Production budget III. Raw materials payments budget IV. Cash budget (34 marks) b) Budgeting has a number of functions within an organisation. Briefly outline three functions of budgeting. (6 marks) Total: 40 marks