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90,000360,000November550,000 110,000440,000December700,000 140,000560,000There is a gross profit margin of 40 percent on sales. All cost (materials, labour and other) are paid for on receipt. Only 20 percent of customer sales are expected to be paid for in the month f delivery. A further 70 percent will be paid after one month and the remainder after two months. Labour and other costs amount to 10 percent of sales. Debtor levels at the end of September are 400,000 and the investment in stock is 350,000 Required:a.Prepare a cash budget for October, November and December, and state if the firm will be able to purchase the new equipment. b.Recommend action that could be taken to improve the working capital position of Whitborrow.
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