Tutti Fruiti plc manufactures ice-cream machine paddles and sells to one retailer. The following information has been compiled for the preparation of the budget for the next financial year:
Expected sales are 40,000 paddles at a selling price of £35.
All sales are on credit.Each paddle requires 0.3 square metres of plastic.
Assume no other raw materials are needed.
The plastic is expected to cost £2 per square metre.
The manufacture of the paddle requires 0.2 hours of machine time at a cost of £6per hour.
The production process has the following:
overhead costs Production salaries £120,000
Other factory operating expenses £60,000
Tutti Fruiti plc maintains an inventory of finished goods, which, at the start of the year, was 2,000 paddles. This is expected to increase to 2,800 at the end of the year.An inventory of plastic is also kept which, at the start of the year, was 200 metres. This is expected to increase to 300 metres at the end of the year.Administration and selling overhead expenses are expected to be £78,000.
The balance sheet at the start of the year is expected to include the following:
Trade receivables £22,000
Trade payables £21,000
Cash at bank £6,000
Trade receivables at the end of the year are expected to be £21,200.
Closing trade payables are expected to be £23,500.
Required:Prepare the functional budgets and a cash budget