Illustration 3 A Lid. has just established a small manufacturing unit to manufacture a new product which is expected to have a high margin. The company has made the following estimates of production, sales and costs: Production and Sales (both in units) Sales Year 2010 April May June July August September Production 2,000 3,000 4,000 5,000 5,000 5,000 1.000 2.000 4.000 5.000 420 Note : Both production and sales will stabilize at 5,000 units from September 2010 onwards. Selling price and cost Selling price per unit 50 Less: Variable Cost Materials 12 Labour 5 Overheads 22 Contribution per unit 28 Note: Fixed costs are expected to be Rs. 10.000 per month The following additional information is also given An initial stock of materials to meet three months requirements will be purchased during April, 2010. Further purchases will be made at the beginning of each month to have sufficient stock of materials for three months. 5 Suppliers of materials have agreed to give one month's credit Labour is to be paid half a month in arrears. Variable overheard will be paid during the month following the month in which it is incurred. Fixed overheads will be incurred in advance at the beginning of every quarter Sales will be 50% cash and the balance will be on two months credit There will be an opening cash balance of Rs. 3,00.000 (in hand and bank) Prepare a cash budget of A Ltd. for the six months ending 30 September 2010. Figures should be given monthly and the months, if any, during which additional funds are required, should be clearly indicated