Clickety Ltd is preparing a master budget for the first quarter of the financial year ending 31 March 2025, and has compiled the following data.

1. The firm sells a single product at a price of $26 per unit. The sales forecast (in units) prepared by the marketing department for the quarter ending 31 March 2025 and the first 7 months of the next financial year is as follows.

2. 40% of the sales are collected in the month of sale, 40% are collected in the following month, and 20% are collected in the second month following the sale.
3. The beginning inventories on 1 April 2025 will be 4200 units of finished goods and no raw materials. The ending finished goods inventory should equal 20% of the sales requirements for the next 3 months, and the raw materials ending inventory should equal 40% of the next month’s production.
4. 80% of the material purchases are paid in the quarter of purchase and 20% are paid in the following quarter. The amount owing for purchases at 1 April 2025 is $82 000.
5. Variable selling expenses are 5% of sales. Administrative expenses are $52 500 per quarter, of which $8200 represents depreciation expense and $40 000 is wages. Fixed selling expenses are $15 200 each quarter. All selling and administrative expenses are paid in the quarter in which they are incurred.
6. The production requirements are below.

Required

(a) Prepare a sales budget by month for the period February to June 2025.

(b) Determine estimated cash collections from receivables for the first quarter of the financial year ending 31 March 2025.

(c) Calculate the number of units to be produced in the first quarter of the financial year ending 31 March 2025.

(d) Prepare a direct materials budget for the first quarter of the financial year ending 31 March 2025.

(e) Prepare a cash budget for the first quarter of the financial year ending 31 March 2025 including any necessary schedules.

(f) Prepare a budgeted statement of financial performance for the first quarter of the financial year ending 31 March 2025.
(g) Calculate the difference between the expected increase in cash and the profit or loss for the first quarter. Explain why the two amounts are different.

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Number of units January 12 500 February 12 000 March 12 500 April 13 000 May 14 000 June 14 000 July 15 500 August 16 000 September October 18 000 24 000