Max Jones was made redundant last year from a senior management role. He is planning to set up his own business of restoring and selling classic motorbikes. He has prepared the following information for the first three months of trading: Revenue and costs: The sales revenue in September, the first month of trading, is expected to be 20,000 and then will increase by 5,000 each month. 0 Max estimates that direct material costs will be 40% of sales revenue. 0 Max will rent a repair garage where bikes will be restored. In September, he will have to pay the garage rent of 12,000 in total for the first three months of trading. 0 Salary and other overhead costs will be 13,000 in total per month, including depreciation of 3,000 per month. The relevant payments will be made in the month the costs are incurred. Purchases: At the beginning of September the business will have a stock of direct materials (inventory) worth 4,000, for which the payment is due in September. a At the end of September the closing stock of direct materials is expected to be worth 5,000, and then will increase by 1,000 at the end of each subsequent month. Cash flow: Max estimates that 80% of sales revenue will be received immediately; the remaining amount will be received in the following month. 0 Max has agreed that half of the direct materials purchases will be paid in the month of purchase, the remaining amount will be paid in the following month. 0 Max received a redundancy payment of 15,000, which he will put towards the opening cash balance of the business at the beginning of September. Reguired: (a) Prepare a budgeted income statement in the contribution format, presenting all relevant components for each of the three months of trading from September and the total for the three-month period. (12 marks) (b) Calculate the sales revenue Max should achieve in the first three months of trading in order to break-even. (3 marks) (0) Prepare a direct material purchase budget (in ) for the first three months of trading from September. (6 marks) (d) Prepare a cash budget for the first three months of trading from September, showing the receipts, payments, opening and closing cash balances each month. (14 marks) (Total of 35 marks)