kindly find the question attached on.......The Confederation of Trade Unions of Kenya (CTUK) has announced that it will call a general strike for all production workers in textile industry. The strike will commence at the beginning of week 3 of the year beginning 1 January 2004 and is expected to continue at least for four weeks. Agoatex Ltd. a garment manufacturing company will be one of the firms that will be affected by the total interruption of supply of raw materials. The following information is available for Agoatex Ltd. for the year beginning 1 January 2004

(a) The Confederation of Trade Unions of Kenya (CTUK) has announced that it will call a general strike for all production workers in textile industry. The strike will commence at the beginning of week 3 of the year beginning 1 January 2004 and is expected to continue at least for four weeks. Agoatex Ltd. a garment manufacturing company will be one of the firms that will be affected by the total interruption of supply of raw materials. The following information is available for Agoatex Ltd. for the year beginning 1 January 2004. Budgeted sales Budgeted production Week 1 Units 40,000 60,000 Week 2 Units 50,000 40,000 Week 3 Units 40,000 Nil The budgeted sales will continue to be made during the period of interruption until stock of finished goods is exhausted. Production will stop at the end of the second week. The current stock level of finished goods is 60,000 units. Stocks of work-in-progress (WIP) is not carried. The product sells at Sh. 600 and the budgeted manufacturing cost is made up as follows: Direct materials Direct wages Variable overheads Fixed overheads Total Sh. 150 70 80 180 480 The company operates a full absorption costing system and the fixed overhead absorption rate is based upon a budgeted fixed overhead of Sh. 9,000,000 per week. Included in the total fixed overheads is Sh. 7,000,000 per week for depreciation of equipment. During the period of interruption, direct wages and variable overheads will not be incurred and the cash expended on fixed overheads will be reduced by Sh. 1,500,000 per week. The current stock of raw materials is worth Sh. 7,500,000. It is intended that these stock should increase to Sh. 14,000,000 by the end of week 1 and then remain at this level during the period of the strike. All direct materials are paid one week after they have been received. Direct wages are paid one week in arrears. It should be assumed that all relevant overheads are paid for immediately the expense is incurred. All sales are on credit, 70% of the sales value is received in cash from the debtors at the end of the first week after the sales have been made and the balance at the end of the second week. The current amount outstanding of materials suppliers is Sh. 8,000,000 and direct wages accruals amount to Sh. 3,200,000. Both of these will be paid in week 1. The current balance owing from debtors is Sh. 31,200,000 of which Sh. 24,000,000 will be received during week 1 and the remainder during week 2. The current balance of cash at bank and in hand is Sh. 1,000,000. Required: A cash budget for weeks 1 to 6 showing the balance of cash at the end of each week together with a suitable analysis of the receipts and payments during each week. (15 marks)