Page 3 Section B Answer TWO Questions 1. You are the management accountant for Rio plc, a retail business which has started operations on January 1. You have been given the following pieces of information: January February March April May Budgeted sales Budgeted (units) labour cost 10,000 50,000 12.000 50,000 30,000 70,000 40,000 80,000 50,000 80,000 Budgeted expenses 12,000 15,000 9,800 10,200 9,600 . Each unit is bought for 20 and sold at 25. Purchases are made in the month of sale. Suppliers for the units are paid 50% in the month of sale and 50% in the following month. Expenses are paid in the month after the expenses are incurred. Rent of 50,000 per month is paid each month. Labour is paid in full by the end of the current month. Labour costs are always treated as period costs. Expenses include a monthly depreciation charge of 2,000, 75% of sales are made for cash and 25% of sales are made on one month's credit. The company will sell its existing delivery lorry with a net book value of 12,000 for the cash price of 6,000 in February. It will also buy a new delivery lorry costing 17,500 for cash in February The company will pay a dividend to shareholders of 75,000 in March The opening cash balance at 1 January is 1,000. Question Continued AC107 2019/20 A 800 Turn over Page 4 R (a Required (a) Prepare a ash budget for the 5 months, January to May, showing net cash receipts and cash purchases. (27 marks) (b) Comment on the company's cash position and any measures they should take to manage this. (b