Ivory Garments, a rapidly expanding garments producer based in Jordan, is in the process of formulating plans for 2022 The Director of Marketing has completed his 2022 forecast and is confident that sales estimates will be met or exceeded The following forecasted sales figures show the growth expected and will provide the planning basis for other corporate departments SALES SALES January February March April May June $4,600,000 5,000,000 4,600,000 5,400,000 6,000,000 6,600,000 July August September October November December $7,000,000 7,000,000 7,400.000 7,400,000 7.000.000 7.800.000 2 The Financial Controller of Ivory Garments has been given the responsibility for formulating the cash flow projection, a critical element during a period of rapid expansion. The following information will be used in preparing the cash analysis 1 Most of the customers of Ivory Garments have a good track record in making the payments when due. The company collects 20% of its bilings in the month of the sale, 50% in the month after the sale and 30% in the second month after the sale Uncollectible accounts are insignificant and should not be considered in the analysis The purchase of fabric is Ivory Garments largest expenditure the cost of these items equals 50% of sales. The company receives 60% of the fabrics one month prior to sale and 40% during the month of sale Prior expenence shows that accounts payable are paid by Ivory Garments one month after receipt of the purchased fabrics 3 Administrative expenses are projected to be 54 280,000 for 2022. All of these expenses are incurred uniformly throughout the year except the property taxes which are paid in four equal instalments in the last month of each quarter. The composition of administrative expenses is Salaries $ 960,000 Promotion 320,000 Property taxes 480.000 Insurance 720.000 Utilities 600,000 Depreciation 1.200,000 Total 54 280.000 Continued on next page Semester 1 - 2021/22 Page 4 of 7 COMT 4 Income tax payments are made by Ivory Garments in the first month of each quarter based on income for the prior quartet Ivory's income tax rate is 30% Ivory's net income for the first quarter of 2022 is projected to be $1,350,000 Ivory Garments uses a calendar year reporting period 5 5. Ivory Garments uses a calendar year reporting period. Required: a) Assuming that the closing cash balance at the end of the first quarter is $450,000, prepare a budgeted schedule of cash receipts and disbursements for Ivory Garments by month, for the second quarter of 2022 (.e., for the months of April, May and June) (27 marks) b) Explain the concept of "master budget and critically discuss its benefits to an organization (8 marks) (Total 35 marks)