I need help with question 2 and 3 if anyone can help would be much appreicatyed

E-SCOOTER Ltd

You are the recently appointed accountant at E-SCOOTER Ltd a new company, which will be incorporated on 1st Sept 2022. Initially, the company will manufacture and sell a single electronic product used in the production of drones.

The following details relate to the companys first financial year: The selling price is 300 per unit. Direct materials cost 85 per unit Direct labour is 6 hours per unit for the first 2 months, reducing to 5 hours per unit thereafter. Direct labour cost 13 per hour

Sales targets for the forthcoming financial year are as follows:

Units Sept 2022 1,200

Oct 1,400

Nov 1,500

Dec 1,900

Jan 2023

2,000

Feb 2,000

Mar 2,100

Apr 2,200

May 2,000

Jun 1,800

Jul 1,800

Aug 1,900

85% of sales will be on credit terms, with customers paying two months later. The remaining sales are paid for immediately. Closing inventory is planned to be 10% of the following months sales target.

Sales for Sept 2023 are expected to be 1,700 units. Direct materials will be purchased during the month they are required for production and paid for during the following month.

An overhead absorption rate of 15 per direct labour hour has been calculated for the variable production overheads.

Variable distribution costs of 10 per unit sold will also be incurred. Total fixed production overheads of 110,000 and total fixed administration and distribution overheads of 75,000 for the year will be incurred on an even basis throughout the year.

All overheads and direct labour costs will be paid for in the month in which they are incurred. All production machinery will be leased; the costs of leasing the machinery are included in the above figures.

E-SCOOTER Ltd will also buy equipment that will be used mainly in the I.T. department. They will purchase and pay for the equipment in Dec 2022. The equipment will cost 25,000 and will be depreciated by 20% per annum. Depreciation is not included in the overhead details given above.

E-SCOOTER Ltd will issue 140,000 ordinary shares of 1 at par for cash on 1st Sep 2022 and the company is unwilling to issue any further shares at this stage. The Board of Directors have little financial knowledge and currently does not include a Finance Director.

In order to assist you have been asked to produce the following: A report (created in Word) to the Board of Directors of E-SCOOTER Ltd which includes

1.An explanation as to why it is important to prepare budgets 10 marks

2.Comments on the budgeted cash position 15 marks

3.Suggestions of ways the monthly budgeted cash balances could be improved 15 marks

4.An appendix (created as an Excel workbook) which shows : The following monthly budgets (on a single worksheet) for the 12 months ended 31st Aug 2023 in as much detail as the information given allows (you should also include a total column for the year):

The Production Budget (in units) The Sales Budgets (in ) The Materials Purchases Budget (in ) The Direct Labour Budgets (in ) The Overheads Budget (in ) 20 marks

Monthly Cash Budget for the company for the 12 months ended 31st Aug 2023 in as much detail as the information given allows (you should also include a total column for the year) 20 marks

A forecast Income Statement (Profit and Loss Account) for the whole of the year 15 marks