Question 4 The Highlander Ltd is a company that manufactures sportswear. The company is based in the south east of German. Most of the sportswear they manufacture is sold to retailers on credit terms, although the company also have a factory shop where they sell at discounted prices to members of the public. The table below contains data that has been extracted from the company's operating budgets for the period running up to the end of the year 2021. Income from Income from Raw Labour sales to large factory shop materials cost () Overhead costs () retailers sales () purchases () () October 450,000 80,000 300,000 170,000 51,000 November 700,000 120,000 400,000 270,000 54,000 December 850,000 160,000 500,000 275,000 54,000 The following additional information is available: 1. It is estimated that 30% of cash from sales to retailers is received at the time of the sale and 70% is received one month later. 2. Cash from factory shop sales is all received at the time of sale. 3. It is estimated that 20% of payments for raw materials purchases are made in the month of purchase and 80% one month later. 4. Labour costs are paid in full at the end of each month. 5. Rent and rates are budgeted at 60,000 per year payable every three months with the first payment due in October. 5. New equipment costing 285,000 is to be acquired in October. The equipment will be paid for in twelve equal instalments beginning in October. 6. Overhead costs are paid one month after they are incurred and include 21,000 of depreciation. The depreciation amount will increase by 4,000 in November due to the purchase of the new equipment. 7. The opening bank balance on 1st October 2021 is forecast to be 25,000. Required a) Prepare the cash budget by month and in total for the three months ended 31st December 2021. (19 marks) b) If there are any cash shortfall in any month during the budget period, suggest ways in which it can be addressed by the company's management. (6 marks) (Total 25 marks)