1. **Problem Statement:** Calculate the cash budget for Atilia Hijabb Sdn Bhd for the fourth quarter of 2022 (October, November, December) based on sales, payment terms, raw material purchases, and other cash inflows. 2. **Given Data:** - Customers pay 70% of sales in cash immediately. - Remaining 30% is paid equally over the next two months (15% each month). - Raw materials needed = 40% of total sales. - Payment for raw materials: 50% same month, 30% next month, 20% two months later. - Other cash inflows = 1789 (thousand RM). - Sales (RM'000): - October: 392 - November: 478 - December: 416 - January 2023: 520 (needed for payment calculations) - February 2023: 509 (needed for payment calculations) 3. **Step 1: Calculate cash collections from customers for each month:** - Cash sales (70% of current month sales) - Credit sales collected in the following two months (15% each month) For October: $$\text{Cash sales} = 0.7 \times 392 = 274.4$$ $$\text{Credit sales from August (15%)} = 0.15 \times 385 = 57.75$$ $$\text{Credit sales from September (15%)} = 0.15 \times 421 = 63.15$$ Total cash collection October = 274.4 + 57.75 + 63.15 = 395.3 For November: $$\text{Cash sales} = 0.7 \times 478 = 334.6$$ $$\text{Credit sales from September (15%)} = 0.15 \times 421 = 63.15$$ $$\text{Credit sales from October (15%)} = 0.15 \times 392 = 58.8$$ Total cash collection November = 334.6 + 63.15 + 58.8 = 456.55 For December: $$\text{Cash sales} = 0.7 \times 416 = 291.2$$ $$\text{Credit sales from October (15%)} = 0.15 \times 392 = 58.8$$ $$\text{Credit sales from November (15%)} = 0.15 \times 478 = 71.7$$ Total cash collection December = 291.2 + 58.8 + 71.7 = 421.7 4. **Step 2: Calculate raw material purchases for each month:** Raw materials needed = 40% of sales two months ahead. For October (purchases for December sales): $$0.4 \times 416 = 166.4$$ For November (purchases for January sales): $$0.4 \times 520 = 208$$ For December (purchases for February sales): $$0.4 \times 509 = 203.6$$ 5. **Step 3: Calculate payments for raw materials each month:** Payments are split as 50% same month, 30% next month, 20% two months later. October payments: - 50% of October purchase (for December sales): $$0.5 \times 166.4 = 83.2$$ - 30% of September purchase (for November sales): September purchase = 0.4 \times 421 = 168.4, so $$0.3 \times 168.4 = 50.52$$ - 20% of August purchase (for October sales): August purchase = 0.4 \times 385 = 154, so $$0.2 \times 154 = 30.8$$ Total October payment = 83.2 + 50.52 + 30.8 = 164.52 November payments: - 50% of November purchase (for January sales): $$0.5 \times 208 = 104$$ - 30% of October purchase (for December sales): $$0.3 \times 166.4 = 49.92$$ - 20% of September purchase (for November sales): $$0.2 \times 168.4 = 33.68$$ Total November payment = 104 + 49.92 + 33.68 = 187.6 December payments: - 50% of December purchase (for February sales): $$0.5 \times 203.6 = 101.8$$ - 30% of November purchase (for January sales): $$0.3 \times 208 = 62.4$$ - 20% of October purchase (for December sales): $$0.2 \times 166.4 = 33.28$$ Total December payment = 101.8 + 62.4 + 33.28 = 197.48 6. **Step 4: Calculate total cash inflows and outflows for each month:** - Total cash inflows = cash collections + other cash inflows (1789) - Total cash outflows = raw material payments October: Inflows = 395.3 + 1789 = 2184.3 Outflows = 164.52 November: Inflows = 456.55 + 1789 = 2245.55 Outflows = 187.6 December: Inflows = 421.7 + 1789 = 2210.7 Outflows = 197.48 7. **Final cash budget summary (RM'000):** | Month | Cash Inflows | Raw Material Payments | Net Cash Flow | |---------|--------------|----------------------|---------------| | October | 2184.3 | 164.52 | 2019.78 | | November| 2245.55 | 187.6 | 2057.95 | | December| 2210.7 | 197.48 | 2013.22 | This cash budget helps Mr. Fattah Amin plan the company's cash position for the last quarter of 2022.