Question 1 A company has produced a profit forecast, by month, for the period May to September May 72 June 80 000 July 120 Aug 140 Sept 112 42 33 33 27 Sales Production cost of sales: Raw materials used Factory wages Production overheads Cost of production Opening stock of finished goods Closing stock of finished goods 27 26 21 74 49 58 65 28 20 21 75 58 67 66 38 30 22 88 67 67 88 Gross profit 7 14 32 42 12 13 Administration and selling overheads 12 13 13 Net profit(loss) 15 3 19 29 Notes: (1) 10% of sales are for cash. Credit sales are settled in the month after sale. (2) Suppliers of raw materials are paid one month after delivery. (3) Stock of raw materials (end of month): April 14,000 May 17.000 June 20,000 July 21.000 August 21,000 September 20,000 (4) Factory wages are paid for each month on the last day of the month (5) Monthly production overheads include depreciation of 8,000 and rent of 3,000. Rent is paid quarterly in advance on the last day of March, June, September and December. The remaining production overheads are paid in the month following that incurred as are all administration and selling overheads. (6) Capital expenditure of 35,000 will be incurred in August. This will not affect the monthly depreciation charge. (7) A bank overdraft balance of 3.000 is expected on 1 June. (8) The profit forecast does not include any bank interest and no allowance is to be made for this in any of the budgets at this stage. REQUIRED (a) Prepare a cash budget for each of the months June, July and August