Question $2$: Projected cash flow

The company is preparing its projected cash flow statements for the coming six months for the department which sells chemistry sets to department stores. The information is as follows:

$\backslash$table$[[,$Number of units produced and sold$],[$December$,2,000],[$January$,1,250],[$February$,1,250],[$March$,1,250],[$April$,1,000],[$May$,1,000],[$June$,1,000],[,]]$

Each unit is sold for $15.$ The department store has a credit period and therefore pays cash to the company in the month following the sale. The raw materials for the sets have a variable cost of $7$ and this is paid in the month of production.

The department has a loan on which it is due to pay the interest in June of $10,000$

The department overheads, including salary, rent and other fixed costs amounts to $10,000$ per month and this is paid every month.

The department also needs to replace some fixed assets. This will amount to $15,000$ an $d$ this will be paid in $3$ equal instalments in January, March and June.

The cash balance at $1$ January is $75,000.$

$($a$)$ Prepare a cash flow statement for the six months January to June $(15$ marks$)$

$($b$)$ When preparing a cash flow statement why do companies start with estimating sales? What is the difference between a qualitative and quantitative method of estimating? $(5$ marks$)$

$($c$)$ As a manager reviewing a projected cash flow, what questions would you ask the