Can you help me with that question? Question 1The following data has been extracted from the operating budgets ofGray Ltd for 2023. The company manufactures shoes for sale tolarge retailers shop and in its own high street shops:Income fromhigh street shopsalesMonthIncomeRaw materialLabourOverheadsfrom salespurchasesto retailer£January££255,00090,000232,50097.5005,500February 262,500232,500112,500225,00090,0005,500March75,000232,50097,5008,20067,500AprilMay232,500236,250108,750 8,400150,00071,250225,000105,000 9,5001. It is estimated that approximately 75% of cash from sales toretailers is received at the time of sale and 25% is received onemonth later. It is also agreed with the retailer that 5% of Maysales will be paid one month in advance.2. Sales in the high street shops are all in cash and received at thetime of sale.3. The company rents out one of its stores. It is going to receivecash rent income of £6,000 in April 2023.4. 60% of payments for raw materials are made in the month ofpurchase, 40% one month later.5. Labour costs are paid in full at the end of each month.6. A new machine costing £120,000 is to be acquired on 28thFebruary. The new machine will be paid for in 3 equal monthlyinstalments beginning in March.7. Monthly overheads are paid one month after they areincurred and include £3,700 of depreciation. The monthlydepreciation amount will increase by £4,000 in March 2023 dueto the purchase of the new machine.8. The opening bank balance on 1st February 2023 is forecast to be£130,000. The company is also forecast to have £20,000 in cashon 1st February 2023.Requireda) Prepare a cash budget for the 3 months period February to April.b) Discuss the cash budget in (a) stating any concerns you wouldhave about the figures and any steps the management of GrayLtd could take to improve the company's cash flow position.(200 words)c) Explain why a business should prepare a cash budget.

A cash budget is a measure of the inflow and outflow of a business over a period of time. This could…

a) Prepare a cash budget for the 3 months period February to April. b) Discuss the cash budget in (a) stating any concerns you would have about the figures and any steps the management of Gray Ltd could take to improve the company's cash flow position. (200 words) c) Explain why a business should prepare a cash budget.

a) Prepare a cash budget for the 3 months period February to April. b) Discuss the cash budget in (a) stating any concerns you would have about the figures and any steps the management of Gray Ltd could take to improve the company's cash flow position. (200 words) c) Explain why a business should prepare a cash budget.

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter7: The Master Budget And Flexible Budgeting

Section: Chapter Questions

Problem 5P: Selling and administrative expense budget and budgeted income statement Budgeted selling and...

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