Fibonacci plans to start up a business on 1 January 2020 with 5,000 cash. The following budget relate to the first 3 months of her business. January 3,000 Sales (in units) February 5,000 March 4,000 1. 2. 3. 4. 5. 6. The selling price per unit for credit sales will be 25. Cash sales will receive a discount of 10% on the selling price. 60% of total monthly sales will be paid by cash and 40% will be sold on one month's credit Interest received will be 1,000 in the month of February. Production in January will be 5,000 units and will increase by 1,000 units every month. Material costs will be 7 per unit. These will be purchased in the same month as production and paid one month later. Labour costs will be 5 per unit and will be paid in the same month as production. Variable overheads will total 3 per unit, payable the month after production. Fixed overheads will be 4,000 per month. A van will be purchased in January for 40,000. This will be paid in four equal instalments starting in March. Rent payable will be 1,000 per month, increasing by 25% in March. 7. 8. 9. 10. 11. REQUIRED: (a) Prepare a Cash Budget for the 3 months January to March, showing clearly the opening and closing balances for each month. [21] (b) Explain 3 ways Fibonacci could deal with any cash shortage. [4]