QUESTION FOUR Bunny Ltd has provided the following budgeted figures for the four months commencing February 2009: Units Sales Production February 600 610 March 700 720 April 900 910 May 1,000 990 16 The company makes and sells one product only, the standard unit costs and selling price of which are: K Selling price 60 Material - 5 kilos at K2 per kilo 10 Labour - 2 hours at K10 per hour 20 Variable overhead - K8 per labour hour 16 The following information is also available: i) Customers are allowed one month's credit; however, 20% of customers pay in cash in the month of sale. ii) Stock of finished product on 1 March 2009 is expected to be 60 units. ii) Materials are purchased in the month before use and are paid for one month after purchase. iv) Labour costs are paid for in the month of production. v) Variable overhead is paid one month after production. vi) Total fixed overhead is K6,000 per month (including depreciation of K500) payable after one month. vii) The opening cash balance at 1 March 2009 is expected to be K8,000 in hand. viii) Finished stock is valued at standard variable cost per unit. ix) There is no stock of work-in-progress. Required: Prepare the Cash Budget for the months of March and April only