Delivery Chai is a new startup by fresh graduates from NSU who home deliver Pastas across Dhaka. They make Pastas using imported pastas, cheese and locally produced chicken along with all the other fresh ingredients of finest quality. They have two Pastas: the standard Pasta Italiano and the customized one named Pasta Basta. The standard Pastas are prepared with antibiotic free chicken along with other ingredients and the customized Pastas add number of options that are customized as per customer demand and are Oven baked. For the third quarter of 2021, estimated sales in units for each product line are as follows:

Month Pasta Italiano(in Containers) Pasta Basta(in Containers)

July 850 300

August 1000 550

September 930 620

October 1,560 500

November 1350 440

The CEO of the Delivery Chai provided you with the following additional information:

Sales: The actual sales for May and the forecasted sales for June were Tk. 1,120,000 and Tk. 1,050,000 respectively for the standard pastas. The relevant numbers for the customized pastas are Tk. 650,000 in May and Tk. 500,000 in June. Delivery Chai prices the standard pastas at Tk. 250 per container and Tk. 400 per container for the customized pastas.

Inventory Policy: The Company believes in customer satisfaction and therefore doesnt store any ready products. Rather theyre using lean production process where theyre producing on demand.

Production requirements: The standard Pastas require 150 gm of chicken per plate and the customized ones require 250 gm of chicken. Chicken costs Tk. 280 per Kg. The cost of all other material (i.e.: pasta, cheese, pasta sauce, capsicum, salt etc.) is Tk. 70 per container for standard units and Tk.100 for the customized units. The standard pasta requires 15 minutes of direct labor time per container and the customized ones require 25 minutes of direct labor time. Direct labor cost per hour is Tk. 150. Fixed Manufacturing Overhead is expected to be Tk. 40,000 per month, of which Tk. 14,000 for non-cash depreciation. Delivery chai applies manufacturing overhead to units based on direct labor hours and the variable manufacturing overhead rate is Tk. 25 per direct labor hours.

Inventory policy-raw materials: Chicken is the main ingredient of Pastas. With regard to the chicken used in production, Delivery chai likes to keep safety stock of 30% of its need of chicken for the next months anticipated production. Delivery chai ended June, 2021 with 155 Kg of meat in stock.

Payables Policy: Delivery chai signed an MOU with Bengal Meat where Bengal Meat agrees to supply all the meat needs on credit. According to the credit policy of Bengal meat for Delivery chai, 40% of the monthly purchase is due on the month of purchase and the rest of the due is settled in following month of purchase. Accounts payable for materials and other items were expected to be Tk. 150,000 on June 31, 2021. Costs of all other materials are purchased on a cash basis during the month of purchase according to the monthly production need.

Collection policy: Half of sales of each month is on cash to regular customers, rest half is to corporate offices. Delivery chai delivers their products to corporate offices offering credit term. For both the standard and customized pasta sold on credit to corporate offices, 20 percent of sales are collected in the month of sales, 70 percent of credit sales are collected the following month and the rest of the dues are collected in the second month following the month of sales.

Sales and Administration costs: Monthly marketing and administrative expenses consist of the following: Salaries and wages: Tk. 15,000, Advertising and promotions Tk. 20,000, Rent: Tk. 40,000 Utilities: 4% of revenue.

Cash and financing: Delivery chai expects to maintain a minimum cash balance of Tk. 150,000 per month. Borrowing can make up any anticipated cash shortage at 10% annual interest. Bank will only lend (and accept repayments) in Tk. 1,000 increments. Cash balance to start the quarter is Tk. 180,000.

Other information: Delivery chai will make a payment of Tk. 230,000 during August for equipment purchased on credit on June. The company also plans to pay dividends of Tk. 120,000 in July.

Required: Prepare the following budgets for Delivery Chai for the third quarter ending September, 2021. Also, show the breakdown of the quarterly budgets into monthly.

1. The production budget