QuestionLance Limited manufactures a special component (WKQ 14) that is used in the making of calculators. As a step towards reducing uncertainty over the finance needs of the new business, the finance manager has asked you to prepare a cash budget for Lance Ltd 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 tabulated them as follows:a) The following projected sales figures are given:Sales ForecastMonthEstimated Sales UnitsMarch260,000April250,000May270,000June280,000July300,000August290,000September310,000October270,000November280,000The 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 cash sales)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 the following month of purchase. One special component (WKQ 14) uses 2 units of direct materials. The company keeps stock of the direct materials, equal to 25% of the next month’s requirements.Balance of direct materials as at end of February 2014 amounts to 130,000 units of direct material at $0.30 per unit. There is no expected change in the direct material costs.c) The Direct Labour cost is paid in the month when such costs are incurred.The number of hours estimated are as follows:MarchAprilMayJuneJulyAugustSeptemberOctober130,000135,000140,000148,000152,000154,000150,000148,000The company pays $2.50 per direct labour hour.d) Operating Expenses are estimated to be $332,000 per month and this is paid at the end of the month in which it is incurred. Included in the operating expenses are depreciation 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 calculations used 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