Based on current trend, $20\%$ of total sales are normally cash sales. However, due to some

changes in policies and strategies to be implemented, it is expected that from February, cash

sales would be $25\%$ of total sales.

The company allows its customers two months credit and based on historical information, $1\%$ of

debtors become irrecoverable.

ii$.$ The company use $25\%$ profit margin for all their prices.

iii. They are currently using JIT $($Just In Time$)$ inventory management technique but they are planning

to change that effectively from end of January on account of recent supplier's struggle to deliver on

time. New policy will be to have enough inventory to cover the next two months sales at the end of

each month.

iv$.$ Their suppliers offer them $2\%$ settlement discount when they pay a month after sales and they are

willing to use that opportunity each time they buy.

v$.$ Other related costs for each month;

Selling and Distribution $2\%$ of sales

General expenses M$40,500,$ including M$4,500$ for depreciation.

$1\mathrm{.}5\%$ will be charged based on overdraft at the beginning of the month by the bank, if any.

Required;

Prepare the cash budget for the $4$ months till end April. $(16$ marks$)$