QUESTION THREE Matero Steel Fabricators Limited commenced business on 1 January 2016 and the following data has been made available. a) Balance at the bank account at 1 January 2016 is K9, 000 and the business has sufficient raw materials in stock for January production. b) Estimated sales are as follows: Sales Units Sales value (K) January 0 0 February 3,200 80,000 5 March 3,600 90,000 April 4,000 100,000 May 4,000 100,000 June 4,000 100,000 c) Production begins on 1 January 2016 and 25% of the following months Sales will be manufacture in January. Each month thereafter production will consist of 75% of the current months sales and 25% of the following months sales. d) Variable production cost per unit is as follows: K Direct materials 7 Direct Wages 6 Variable overhead 2 15 e) Each month 50% of the materials required for the following months production will be bought. The other 50% will be purchased in the month of production. Payment will be made in the month following purchase. f) Direct wages are paid monthly and are paid on the last working day of each month. g) 70% of the variable production overhead is paid in the month it was incurred and 30% is to be the following month. h) Fixed overheads are K3, 000 per month. i) Asset deprecation is K150 per month on its equipment. j) The company plans to rent out its property for K 900 per month. k) Receipts for one months sales are expected to be as follows: 20% received in current month 50% received in following month 30% received in third month Required Prepare a cash budget for each of the first four months of 2016 and make your recommendations to management on the cash budget. [Tota