QUESTION 2 REQUIRED Use the information provided below to prepare the Cash Budget for a project of Winclo Limited for each quarter of 2020. INFORMATION The following information relates to a project of Winclo Limited. The project involves the production of water filters for refrigerators and the budgeted information for 2020 is as follows: 1. Balances on 31 December 2019: Bank (Unfavourable) R200 000 Creditors (for direct materials) R300 000 Trade debtors R900 000 2. Sales of the water filters by quarter for 2020 are projected as follows: Units First quarter 5 000 Second quarter 5 800 Third quarter 6 000 Fourth quarter 7 500 The selling price is R400 per unit. Sixty percent (60%) of the sales are for cash. Twenty percent (20%) of the cash sales are to wholesalers and they are entitled to a 10% discount. The balance of the sales is on credit. These customers are expected to pay in the quarter after the sale. 3. Winclo Limited's planned production schedule for 2020 is as follows: 4. Units First quarter 6 000 Second quarter 6 800 Third quarter 7 000 Fourth quarter 8 500 Each water filter uses 1.25 hours of direct labour. Employees are paid R80 per hour. Labour costs are paid in the month in which they are incurred. 5. Direct material purchases for each quarter are expected to be as follows: R First quarter 600 000 Second quarter 650 000 Third quarter 700 000 Fourth quarter 800 000 6. 7. 8. 9. Direct materials are purchased on credit. Sixty percent (60%) of the materials purchased are paid for in the quarter of acquisition, and the remaining 40% is paid for in the following quarter. Fixed production overheads are expected to total R220 000 per quarter. Of this R70 000 represents depreciation. Fixed production overheads are paid for in the quarter in which they are incurred. Variable production overheads are expected to amount to R12 per direct labour hour. These variable overheads are paid for in the quarter in which they are incurred. All selling and administrative expenses are paid for in the quarter in which they are incurred. Fixed selling and administrative expenses total R90 000 per quarter. Variable selling and administrative expenses are budgeted at R10 per unit sold. Two percent (2%) of the sales value of each quarter (before any discounts are deducted) will be donated to schools in the vicinity. Guidelines: All answers must be typed out and workings must be showing.