The selling price is R260 per unit. 3. Cash sales comprise 40% of total sales. The balance of the sales is on credit. Debtors usually pay one month after the sale. 4. All the units produced each month are expected to be sold in the same month. The materials purchase price is estimated at R75 per unit. Forty percent (40%) of the material purchases are paid for in the month of purchase and the balance is paid two months later. 5. Labour costs amount to R70 per unit and are paid in the month in which they are incurred. 6. Fixed manufacturing, selling and administrative overheads are budgeted at R100 000 per month. Fixed overheads are payable in the month in which they are incurred. 7. Sales commission amounts to R6 for every unit sold. Payment is delayed by one month. 8. A new motor vehicle with a cost price of R200 000 is to be purchased during April 2021 to replace the old vehicle. A deposit of 20% of the purchase price is payable in the month of the purchase and the balance plus finance charges of R30 800 will be paid in 36 equal instalments commencing May 2021. The old vehicle which had a cost price of R120 000 is expected to be sold for cash in April for R40 000.

QUESTION 2 (20 Marks) REQUIRED Prepare the Cash Budget for a project of Fego Limited for the period 01 April 2021 to 31 May 2021. (Note: The Cash Budget must reflect separate monetary columns for each month.) INFORMATION The financial manager of Fego Limited supplied the following information: 1.

The selling price is R260 per unit. 3. Cash sales comprise 40% of total sales. The balance of the sales is on credit. Debtors usually pay one month after the sale. 4. All the units produced each month are expected to be sold in the same month. The materials purchase price is estimated at R75 per unit. Forty percent (40%) of the material purchases are paid for in the month of purchase and the balance is paid two months later. 5. Labour costs amount to R70 per unit and are paid in the month in which they are incurred. 6. Fixed manufacturing, selling and administrative overheads are budgeted at R100 000 per month. Fixed overheads are payable in the month in which they are incurred. 7. Sales commission amounts to R6 for every unit sold. Payment is delayed by one month. 8. A new motor vehicle with a cost price of R200 000 is to be purchased during April 2021 to replace the old vehicle. A deposit of 20% of the purchase price is payable in the month of the purchase and the balance plus finance charges of R30 800 will be paid in 36 equal instalments commencing May 2021. The old vehicle which had a cost price of R120 000 is expected to be sold for cash in April for R40 000.

A favourable bank balance of R30 000 is expected on 31 March 2021.

February March April MayUnits 6 000 5 500 5 000 6 200