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Kalistos Shoes has been in existence for the past three years. It was formed to buy leather and process them to the specific needs of the customers. The business has fixed assets costing $350,000. The fixed assets are expected to have a five-year life with $5,000 residual value at the end of that time.

Sales were forecasted at 7000 units for the first two months with 15% increase month on month for the rest of the year.

The selling price of each unit will be $60 for the first four months with a 20% increase for the two months after.

The cost of production of each unit is specified as follows:

	$
Cost of leather purchased	20
Direct Labour	16
Fixed Overhead	12
	48

The fixed overhead per unit includes an allocation of depreciation. The annual depreciation is calculated on a straight-line basis and is allocated on monthly basis.

Suppliers allow for a months credit for 45% of each months purchase with the remaining paid in the month of purchase. Customers are expected to pay 50% in the month of sale and the remaining will be received in the following month whilst 2% of the total sales amount is expected to go bad.

Wages are paid as they are incurred in production. Fixed overhead costs incurred are paid a month later.

The stock of finished goods at the end of each month will be sufficient to satisfy 15% of the planned sales of the following month. The stock of leather at the end of each month remains constant. It may be assumed that, the year is divided into months of equal length and that, sales, production and purchases are spread evenly throughout any month.

You are required to prepare for six months of trading next year:

1. Sales Budget
2. Production Budget
3. Schedule of receipts from debtors
4. Schedule of payments to suppliers
5. Cash Budget

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