QUESTION 2 (40 Marks) You are the newly appointed management accountant of Bordeaux Ltd. Your first task is to sort out the cash budget of the company. The previous accountant has completed parts of it already. The company's sales have been forecasted as follows (all sales are on credit): The units are sold for R12 each. One quarter of all sales income is received in the month of sale and the balance is received in the following month. The company's policy is to keep a closing inventory of finished goods equal to 30% of the next month's sales. 3 Part of the raw materials requirement budget of the company looks as follows: Raw materials cost R2 per kilogram. Purchases of raw materials are paid for as follows: - 40% in the month of purchase - 60% in the month following purchase Accounts payable at 31 October 20x0 was R72000. Selling and administrative expenses are expected to total R120 000 each month. These expenses are paid in the month in which they are incurred. Depreciation amounts to 10% of total selling and administration costs. The bank overdraft on 31 October 20x0 was R150 000 . Required: (a) Prepare a schedule of expected cash collections for November and December.(6) (b) Prepare the production budget for November and December. (10) (c) What is the company's policy concerning the closing inventory of raw materials that must be kept on hand? (What percentage closing inventory do they desire? (5) (d) Calculate the Rend value of raw materials purchases for November and December. (6) (e) Prepare a schedule expected cash disbursements for raw materials purchases and selling administrative expenses for November and December (7) (f) Assuming no other receipts or payments in November, does the company end November with a surplus or a deficit in their cash balance? What is the amount? (6)