A company has produced the following information from which a cash budget for the first six months of the year is required. The company makes a single product that sells K50, 000 and the variable cost of each unit is as follows: K26, 000 K8, 000 2, 000 Material Labour (wages) Variable overhead Fixed overheads (excluding depreciation) are budgeted at K5, 500,000 per month payable on the 23rd of each month. NOTES i. Sales units for the last two months of the year. November December 1000 1200 ii. Budgeted sales units for next year February 1600 January March April May June 1400 1800 2000 2200 2600 111. Production quantities for the last two months of the year. November 1200 December 1400 iv. Budgeted production units for next year January 1600 February 2000 March April 2600 May 2400 June 2400 2200 v. Wages are paid in the month when output is produced vi. Variable overhead is paid 50% in the month when the cost is incurred and 50% of the following month vii. Suppliers of materials are paid two months after the material is used in production viii. Customers are expected to pay at the end of the second month following sale. ix. A new machine is scheduled for January costing K34, 000,000; this is to be paid for in February. x. An old machine is to be sold for cash in January for K1,200,000 xi. The company expects to have a cash balance of K35,500,000 on 1 January Required a. prepare a month by month cash budget for the first six months of next year (15 marks) b. comment on the action management might take in the light of the cash budget you have prepared (5 marks)