1. **Problem Statement:** Calculate the cash collections and cash payments for raw materials for Atilia Hijabb Sdn Bhd for the fourth quarter of 2022 (October, November, December) based on the given sales data and payment terms. 2. **Given Data and Rules:** - Customers pay 70% of sales in cash immediately. - The remaining 30% is paid equally over the next two months (15% each month). - Raw materials needed are 40% of total sales. - Raw materials are purchased two months in advance. - Payment for raw materials: 50% in the month of purchase, 30% one month after, 20% two months after. - Other cash inflows: 17.89 (thousand RM). 3. **Sales Data (RM'000):** - June: 550 - July: 440 - August: 385 - September: 421 - October: 392 - November: 478 - December: 416 4. **Step 1: Calculate Cash Collections for Each Month in Q4 2022** For month $M$, cash collections = $$ 0.7 \times \text{Sales}_M + 0.15 \times \text{Sales}_{M-1} + 0.15 \times \text{Sales}_{M-2} $$ - October collections: $$ 0.7 \times 392 + 0.15 \times 421 + 0.15 \times 385 = 274.4 + 63.15 + 57.75 = 395.3 $$ - November collections: $$ 0.7 \times 478 + 0.15 \times 392 + 0.15 \times 421 = 334.6 + 58.8 + 63.15 = 456.55 $$ - December collections: $$ 0.7 \times 416 + 0.15 \times 478 + 0.15 \times 392 = 291.2 + 71.7 + 58.8 = 421.7 $$ 5. **Step 2: Calculate Raw Material Purchases for Each Month in Q4 2022** Raw materials needed = 40% of sales two months later. - October purchases (for December sales): $$ 0.4 \times 416 = 166.4 $$ - November purchases (for January 2023 sales): $$ 0.4 \times 520 = 208 $$ - December purchases (for February 2023 sales): $$ 0.4 \times 509 = 203.6 $$ 6. **Step 3: Calculate Cash Payments for Raw Materials in Q4 2022** Payments are spread over three months: 50% current month, 30% previous month, 20% two months prior. - October payments: - 50% of October purchases (for December sales): $0.5 \times 166.4 = 83.2$ - 30% of September purchases (for November sales): $0.3 \times (0.4 \times 478) = 0.3 \times 191.2 = 57.36$ - 20% of August purchases (for October sales): $0.2 \times (0.4 \times 392) = 0.2 \times 156.8 = 31.36$ - Total October payments: $83.2 + 57.36 + 31.36 = 171.92$ - November payments: - 50% of November purchases (for January sales): $0.5 \times 208 = 104$ - 30% of October purchases (for December sales): $0.3 \times 166.4 = 49.92$ - 20% of September purchases (for November sales): $0.2 \times (0.4 \times 478) = 0.2 \times 191.2 = 38.24$ - Total November payments: $104 + 49.92 + 38.24 = 192.16$ - December payments: - 50% of December purchases (for February sales): $0.5 \times 203.6 = 101.8$ - 30% of November purchases (for January sales): $0.3 \times 208 = 62.4$ - 20% of October purchases (for December sales): $0.2 \times 166.4 = 33.28$ - Total December payments: $101.8 + 62.4 + 33.28 = 197.48$ 7. **Step 4: Calculate Total Cash Inflows for Each Month in Q4 2022** Add other cash inflows (17.89) to cash collections. - October total inflows: $395.3 + 17.89 = 413.19$ - November total inflows: $456.55 + 17.89 = 474.44$ - December total inflows: $421.7 + 17.89 = 439.59$ 8. **Final Summary:** - October: Collections = 395.3, Payments = 171.92, Total inflows = 413.19 - November: Collections = 456.55, Payments = 192.16, Total inflows = 474.44 - December: Collections = 421.7, Payments = 197.48, Total inflows = 439.59 These calculations help Mr. Fattah Amin prepare the cash budget for Q4 2022.