QUESTION THREE $[25]$

The following information was supplied to you by Meta Ltd:

$1.$

The bank account reflects a favourable balance of R$200000$ on $31$ May.

$2.$

The expected monthly sales in unites are as follows:

Month

Units

May

$4000$

June

$6000$

July

$6500$

August

$5000$

The selling price per unit is R$300.$ All units produced are sold in the same month.

$3.$

Cash sales is $60\%$ of total sales. The balance of the sales is on credit. Debtors pay in the month after the sale.

$3$

$4.$

Materials purchases are expected to be as follows:

May

R$480000$

June

R$600000$

July

R$640000$

August

R$540000$

$40\%$ of the material purchases is for cash and the balance is paid for in the following month.

$5.$

Labour costs amounts to R$70$ per unit and are paid in the month in which they are incurred.

$6.$

Manufacturing overheads are budgeted at R$74000$ per month, excluding R$6000$ for depreciation on machinery. Manufacturing overheads are payable in the month in which they are incurred.

$7.$

Selling and administration costs contain a fixed portion of R$80000$ per month and a variable component of $20\%$ of the monthly sales value. These costs are paid by the end of the applicable month.

$8.$

Equipment with a cost price of R$700000$ is to be purchased during June. A deposit of $20\%$ of the purchase price will be paid in the month of the purchase and the balance plus finance charges of R$40000$ will be paid in twelve equal monthly instalments commencing July.

Required:

Prepare the Cash Budget for June, July and August using separate columns for each month.