prepare the Cash Budget for each of the first three months of operations (i.e. July, August and September 2022). Use separate monetary columns for each month.

INFORMATION The following information relates to Irene Limited that decided to invest in a project that will commence on 01 July 2022 with R300 000 cash.

1. New machinery and equipment will be purchased on 01 July 2022 for R150 000. A deposit of 20% will be paid immediately and the balance will be paid in six equal instalments at the end of each month commencing 31 July 2022.

2. Production will commence on 03 July 2022 and 7 000 units will be produced during the first month of operations. Production is expected to increase by 1 000 units per month thereafter. 3. Estimated sales are as follows:

R July 580 000

August 620 000

September 660 000

October 700 000

4. Cash sales are expected to comprise 40% of the total sales and these customers are entitled to a 10% cash discount. The balance of the sales will be on credit and debtors are expected to pay in the month after the sale.

5. Variable production costs per unit are estimated as follows:

Direct materials R26

Direct labour R10

Overheads R12

6. Seventy percent (70%) of the direct materials will be purchased for cash for the production requirements of each month. The balance will be purchased on credit and creditors will be paid in the month after the purchase.

7. Direct workers will have their salaries paid on the last working day of each month.

8. Variable production overheads will be paid one month after they are incurred.

9. Fixed overheads are estimated at R25 000 per month, excluding depreciation of R5 000 per month. Fixed overheads are paid monthly