introduction to accounting managerial

CZ? R&R Ltd is a wholesale business. The budgeted income statements for each of the next three months are as follows: m M 000 000 Sales revenue 7_0 @ Cost of goods sold 45 50 Salaries 8: wages 10 10 Elecnicity 5 5 6 Depreciation 3 3 2 Other overheads Z Z 2 Total expenses E E E Prot for the month 2 I The business allows all of its customers one month's credit (namely, that cash from January sales will be received in February). Sales revenue during December totalled 50,000. 0 The inventories balance at 1 January will be 40,000. The business plans to maintain inventories at their existing level until the end of March, when they are to be increased by 10,000. And then inventories will remain at the higher level indenitely. Inventories purchases are made on one month's credit as well. December purchases totalled 30,000. ' Salaries 3i: wages are paid in the month they are incurred. I Elecnicity expenses are paid at the end of each quarter. 0 Other overheads are paid every two months. a The business plans to buy and pay for a new delivery van in March. This will cost a total of 40,000, but an existing van will be traded in for 10,000 as part of the deal. a The opening cash balance at the Mginning of January should be 5,000. Requ Ired: :1). Prepare the following budgets of RELR Ltd for the three months ending 31 March: i) A materials inventories budget ii) A trade receivable budget iii} A trade payable budget iv) A cash budget mwww b). Please comment on the key concern for R&R Ltd from the results in cash budget above. Can you provide some suggestions could overcome this problem, and state the possible 10 criticisms of traditional budgeting for a business