question no 3

As featured above. Rasa Sorga relics on budgeting to aid the management of its cupcake operations. Assumes that Rasa Sorga prepares monthly cash budgets. Relevant data from assumed operating budgets for 2020 are as follows: January February RM RM Sales 460,000 412.000 Direct materials purchases 185.000 210,000 Direct Labor 70.000 85,000 Manufacturing overticad 50.000 65,000 Selling & administrative expenses 85.000 95.000 Rasa Sorga Sweet Bakery sells its cupcakes in its own caf as well as supplying to other stores and cafes. For wholesale cupcakes, the collections of sales are spread over the period. Collections are expected to be 75% in the month of sales, and 25% in the month following the sale. Rasa Sergs pays direct materials purchases in cash in the month of purchase, and the balance due in the month following the purchase. All other items above are paid in the month incurred. (Depreciation has been excluded from manufacturing overhead and selling & administrative expenses ) Other data: 1. Sales: December 2019, RM320,000 2. Purchase of direct materials: December 2019: RM175,000 3. Other receipts: January - Donation received, RM2,000 February - Sale of used equipment RM4,000 4. Other disbursements: February-Purchased equipment. RM10.000 5. Repaid debt: January-RM30,000 The company's cash balance on January 1, 2019. is expected to be RM50,000. The company wants to maintain a minimum cash balance of RM45.000 Required: 1 (10 marka) 3 (15 marks) What are the advantages of preparing the cash budget for Rasa Serga Sweet bakery? (10 marks) [Total: 60 marks)