QUESTION 3 A newly formed kit car company will commence operations in January. The following estimates have been prepared for the next four months: April March 45 February January 75 Sales (kits) Production (kits) 30 60 60 40 40 4500 200 200 There will be nil stocks (kits) at 1 January. Stocks (raw material) to have the value of $20,000 to be in stock at 31 January and continuously thereafter. Selling price (per kit) Cost per kit Material Labour Variable overhead $1.500 S 700 400 100 Fixed overhead will be $11,500 per month. Plant and Machinery $100,000 of plant to be purchased payable as follows: February $50,000; April $25,000; June $25,000. Depreciation is to be charged at $1,500 per month. XS00 5 S-5 S 5 12S Trade Terms Sales-50 % cash, the balance to be payable 2 months later. Labour- cash. All other expenditure-2 months' credit. Required Prepare a cash budget for the 4 months to April, showing clearly the balance (or overdraft) at each a. month end. b. State how many kits will be in stock at 30 April. 2