Class Name FTDipCom16 / FTDipGS12 / FTDipHRM8 / FTDipSRM1 / FTPSIM3 / PTDipCom8 /PTDipSRM2Module Accounting for ManagersIndividual Assignment 30% (40 marks)Date Due: Session 14Topic F: Budgeting (Extract from module learning outcomes).Understand the process of budget preparation including those relating to cash flow.QuestionLance Limited manufactures a special component (WKQ 14) that is used in the makingof calculators. As a step towards reducing uncertainty over the finance needs of thenew business, the finance manager has asked you to prepare a cash budget for LanceLtd for the eight (8) months period from 1 March 2014 till 31 October 2014.You have collected some raw data from the concerned department heads and tabulatedthem as follows:a) The following projected sales figures are given:Sales Forecast Month Estimated Sales Units March 260,000April 250,000May 270,000June 280,000July 300,000August 290,000September 310,000October 270,000November 280,000The estimated selling price per special component is $5.00. The collections for the above sales forecast are as follows:i. Collection from customers within the month of sale = 10% ( deemed to be cashsales)ii. Collection from customers following the month of sale = 50%iii. Collection from customers following the second month of sales = 30%iv. 10% of the sales are estimated to become irrecoverable.b) Direct materials are acquired one month prior to production and are paid thefollowing month of purchase. One special component (WKQ 14) uses 2 units ofdirect materials. The company keeps stock of the direct materials, equal to 25% ofthe next month’s requirements.Balance of direct materials as at end of February 2014 amounts to 130,000 unitsof direct material at $0.30 per unit. There is no expected change in the directmaterial costs.c) The Direct Labour cost is paid in the month when such costs are incurred.The number of hours estimated are as follows:March April May June July August September October130,000135,000 140,000 148,000 152,000 154,000 150,000 148,000The company pays $2.50 per direct labour hour.d) Operating Expenses are estimated to be $332,000 per month and this is paid atthe end of the month in which it is incurred. Included in the operating expenses aredepreciation charges worth $16,000 per month.e) Income tax payments of $60,000 are due both in June and September 2014.f) Lance Ltd’s Cash on Hand at the end of February 2014 was $350,000Credit for this assignment will be given on the workings, formulas and calculationsused to arrive at the financial values. Required:Prepare the following budgets:1) Sales [4 marks]2) Direct Materials Purchase Budget [8 marks]3) Direct Labour Budget [4 marks]4) A monthly cash budget for the 8-month period of March to 31 October 2014. [22 marks]Format and presentation [2 marks]Total 40 Marks