Q. 2.b. Royal Furniture Co, makes bookstands and expects sales and collections for the first three months of 2020 to be as follows: January February March Total Sales quantityfunits) 9,600 7,800 11,100 28,500 Revenue Rs. 128,000 Rs. 104,000 Rs. 148,000 Rs. 380,000 Collections Rs. 126,000 Rs. 90,000 Rs. 140,000 Rs. 356,000 The December 31, 2019, balance sheet revealed the following selected account balances: Cash Rs. 18,230; Direct Material inventory Rs. 8,230; Finished Goods Inventory Rs. 23,200 and Accounts Payable Rs. 5,800. The Direct Material Inventory balance represents 1,580 pounds of scrap Iron and 1,200 bookstand bases. The Finished Goods Inventory consists of 1,920 bookstands. Each bookstand requires 2 pounds of scrap Iron, which costs Rs. 3 per pound. Bookstand bases are purchased from a local lumber mill at a cost of Rs 2.50 per unit. Company management decided that beginning in 2020, the ending balance of Direct Material Inventory should be 25 percent of the following month's production requirements and that the ending balance of Finished Goods Inventory should be 20 percent of the next month's sales. Sales for April and May are expected to be 12,000 bookstands per month The company normally pays for 75 percent of a month's purchases of direct material in the month of purchase on which it takes a 1 percent cash discount). The remaining 25 percent is paid in full in the month following the month of purchase. Direct labor is budgeted at Rs.0.70 per bookstand produced and is paid in the month of production Total cash manufacturing overhead is budgeted at Rs. 14,000 per month plus Rs. 1.30 per bookstand. Total cash selling and administrative costs equat Rs. 13,600 per month plus 10 percent of sales revenue. These costs are al paid in the month of incurrence. In addition, the company plans to pay executive bonuses of Rs. 25,000 in January 2020 and make an estimated quarterty tax payment of Rs. 5,000 in March 2020 Management requires a minimum cash balance of Rs. 10,000 at the end of each month. If the company borrows funds, it will do so only in Rs. 1,000 multiples at the beginning of a month at a 12 percent annual interest rate. Loans are to be repaid at the end of a month in multiples of Rs. 1,000. Interest is paid only when a repayment is made. Investments are made in Rs. 1,000 multiples at the end of a month, and the return on investment is 8 percent per year. Required: a. Prepare a production budget by month and in total for the first quarter of 2020 b. Prepare a direct material purchases budget by month and in total for the first quarter of 2020. Prepare a schedule of cash payments for purchases by month and in total for the first quarter of 2020 d. Prepare a combined payments schedule for manufacturing overhead and selling and administrative cash costs for each month and in total for the first quarter of 2020 e Prepare a cash budget for each month and in total for the first quarter of 2020. 1. What remedial measures would you suggest for improvement in the cash collection to reduce loan burden. Q. 2.b. Royal Furniture Co, makes bookstands and expects sales and collections for the first three months of 2020 to be as follows: January February March Total Sales quantityfunits) 9,600 7,800 11,100 28,500 Revenue Rs. 128,000 Rs. 104,000 Rs. 148,000 Rs. 380,000 Collections Rs. 126,000 Rs. 90,000 Rs. 140,000 Rs. 356,000 The December 31, 2019, balance sheet revealed the following selected account balances: Cash Rs. 18,230; Direct Material inventory Rs. 8,230; Finished Goods Inventory Rs. 23,200 and Accounts Payable Rs. 5,800. The Direct Material Inventory balance represents 1,580 pounds of scrap Iron and 1,200 bookstand bases. The Finished Goods Inventory consists of 1,920 bookstands. Each bookstand requires 2 pounds of scrap Iron, which costs Rs. 3 per pound. Bookstand bases are purchased from a local lumber mill at a cost of Rs 2.50 per unit. Company management decided that beginning in 2020, the ending balance of Direct Material Inventory should be 25 percent of the following month's production requirements and that the ending balance of Finished Goods Inventory should be 20 percent of the next month's sales. Sales for April and May are expected to be 12,000 bookstands per month The company normally pays for 75 percent of a month's purchases of direct material in the month of purchase on which it takes a 1 percent cash discount). The remaining 25 percent is paid in full in the month following the month of purchase. Direct labor is budgeted at Rs.0.70 per bookstand produced and is paid in the month of production Total cash manufacturing overhead is budgeted at Rs. 14,000 per month plus Rs. 1.30 per bookstand. Total cash selling and administrative costs equat Rs. 13,600 per month plus 10 percent of sales revenue. These costs are al paid in the month of incurrence. In addition, the company plans to pay executive bonuses of Rs. 25,000 in January 2020 and make an estimated quarterty tax payment of Rs. 5,000 in March 2020 Management requires a minimum cash balance of Rs. 10,000 at the end of each month. If the company borrows funds, it will do so only in Rs. 1,000 multiples at the beginning of a month at a 12 percent annual interest rate. Loans are to be repaid at the end of a month in multiples of Rs. 1,000. Interest is paid only when a repayment is made. Investments are made in Rs. 1,000 multiples at the end of a month, and the return on investment is 8 percent per year. Required: a. Prepare a production budget by month and in total for the first quarter of 2020 b. Prepare a direct material purchases budget by month and in total for the first quarter of 2020. Prepare a schedule of cash payments for purchases by month and in total for the first quarter of 2020 d. Prepare a combined payments schedule for manufacturing overhead and selling and administrative cash costs for each month and in total for the first quarter of 2020 e Prepare a cash budget for each month and in total for the first quarter of 2020. 1. What remedial measures would you suggest for improvement in the cash collection to reduce loan burden