Dale Ltd just started business and manufactures a single Product A. The product details are as follows:

Selling price per unit of Product A: £80

Particulars	Quantity of inputs of Product A	Price (£)
Direct material	4 kg	9/kg
Direct labour	5 hours	13/hr

Dale Ltd is considering its budget for the next year and has made the following estimates of sales demand in units for the Product A from July to October:

Month	Original Sales in units	New Sales in units
July	430	1321
August	450	1341
September	520	1411
October	580	1471

It is company policy to hold closing stocks (ending inventories) of finished goods at the end

of each month equal to 60% of the following month’s sales demand.

There is no opening stock (beginning inventories) of finished goods at the beginning of July.

The inventory (stock) details of the direct materials are budgeted as follows:

Particulars	June	July	August	September
Closing Stock in kgs (Ending Inventory)	280	270	310	290

Additional information:

(1) The opening cash balance on 1st July is £6,500.

(2) Cash is collected from customers for sales in the following manner:

Month of sale (After giving them 2% cash discount)	25%
Month following the sale	50%
2 months following sale	20%
Amount uncollectible (bad debts)	5%

There were no sales receipts prior to July.

(3) 36% of purchases are paid for in cash in the month of purchase, and the balance is paid in the following month. The purchases made in June were £2,520.

(4) Labour charges of £3,500 per month are paid every month.

(5) Overheads are incurred at £1,200 per month out of which £200 per month is

depreciation on machinery.

(6) The company paid £7,500 to buy a machine in September.

Prepare the following budgets for July, August and September:

1.Prepare a sales budget for Product A in amount (£).

2.Prepare a production budget for Product A in units.

3.Prepare a raw material budget in kgs and in amount (£).

4.Prepare a direct labour budget in amount (£).

5.Prepare a cash budget showing cash inflows (receipts) and cash outflows (payments) for

July, August, and September, showing the final closing cash balance at the end of each

month.

Show all necessary notes, formula and workings. Keep two decimal places for all results in

your calculations.