Question 1 Slat and Company have recently set up a business which will manufacture and sell a furniture component, the F12 On the 19 August 2021, the company issued 85,000 of share capital for cash. During the month of August, the company took out a loan of 100,000 and paid for machinery that cost 45.000 The Company's monthly expenditure includes rent of 2,300 per month and additional fixed costs of 3,200 - both are paid in the month they are incurred. The company has budgeted sales for the following three months as shown below. Of the monthly sales, it is expected that 35% will be cash sales with the remainder being paid in the month following the sale. Materials costs are 15.50 per unit. Materials are purchased in the month of production on one month's credit. The labour.cost per unit is 12.80 and variable overheads of 4.75 per single unit of the F12. Both labour and variable overhead costs are paid in the month of production. If a cash deficit arises in any month, overdraft interest 2.5% per month will be charged and should be included in the cash flow statement in the following month. Monthly Sales August September October E138.000 E152.000 Production levels for the next three months are as follows: August 4000 units September 5000 units October B000 units Required: a) Prepare a monthly cash budget for Slat and Company for its first 3 months of trading. Show clearly the closing cash balance each month and the total cash flows over the period. (17 marks) b) Outline the advantages of preparing a monthly cash budget for Slat and Company (3 marks) c) Explain to the management of Slat and Company any issues arising from the cash flow statement you prepared. (5 marks) (Total 25 marks)