QUESTION

Teleshop Namibia Ltd(TelNam) is a Namibian based company that manufactures a component to required in the telecommunication industry . The company prepares budgets on a quarterly basis . you have recently joined the company as a management accounting intern, and have been tasked to assist the company in the preparation of their cash budget for the forthcoming period . you have thus been presented with the following information .

1.The company's bank account will be having a debit balance of N$ 100 000 ,By end of December 2020

2. Each quarter is expected to generate sales units as follows: Sales units Quarter 1 4 000 Quarter 2 4 100 Quarter 3 4 600 Quarter 4 5 500 The projected selling price is N$120 per unit. 70% of the customers will pay cash, and of those customers, 30% qualify for a cash discount of 5%. The rest of the customers are on credit and they settle their accounts in the same quarter as the sale. Bad debts are estimated to be 5% per quarter. 3. The production schedule for 2021 is as follows: Units Quarter 1 4 600 Quarter 2 5 500 Quarter 3 5 700 Quarter 4 6 200 4. The direct labour per each component is 0.6 hours paid at N$20 per hour in cash. 5. Direct materials will be purchased as follows: NS Quarter 1 230 000 Quarter 2 250 000 Quarter 3 260 000 Quarter 4 290 000 60% of the materials are on credit and the balance on cash. The payment of credit purchases materials is done as follows: 75% in the quarter 25% in the following quarter. Page 14 of 16 The purchases for the fourth quarter of 2020 are expected to be N$340 000. 6. Fixed manufacturing overheads will be paid in the quarter in which they are incurred. TelNam has budgeted for fixed costs at N$200 000 for each quarter. Depreciation at a rate of $20 000 per quarter is included in this amount. 7. The variable manufacturing overheads will N$5 per direct labour hour and are paid for in the quarter in which they incurred. It is anticipated that they will increase by 10% on 1 October 2020. 8. Fixed selling and administrative expenses will amount to N$50 000 per quarter and will be paid for in the quarter in which they occurred. 9. Variable selling and administrative expenses will be N$6 per unit