Farmville Ltd will commence business on 19tJuly, providing a mobile veterinary service to the farming community

Farmville Ltd will commence business on 19tJuly, providing a mobile veterinary service to the farming community. The following information has been estimated: Cash of €6,000 and equipment worth €1,000 will be invested in the business by the vet on July 1sThe business will operate by charging farmers per hour. It is estimated that there will be 140 chargeable hours in the first month, and 240 chargeable hours per month thereafter. The anticipated rate per hour is €95. A veterinary assistant will be employed from 1* August at a salary of €12,000 per annum payable monthly as incurred. Medicines and other materials are estimated to cost €12 per hour. Initial stocks costing €1,200 will be purchased for cash at the commencement of business. This level of stock will be maintained throughout. Suppliers will allow one month's credit on all purchases, after the initial opening stock which must be paid for in cash. A second-hand jeep will be purchased at the commencement of business for €7,000. This will depreciate at a rate of 25% per annum, straight line. Office services will be provided by a local agency. Initial set-up costs will amount to €550 in the first month and c250 thereafter. Office services must be paid for in the month the service is provided Insurance of €600 per quarter will be payable in advance. General overheads of €150 per month will be payable as incurred. The vet will draw €900 per month as wages. Clients are expected to settle their accounts as follows: 60% of farmers will pay immediately; the balance will be required to pay within one month. 2% of debtors are estimated as bad debts. REQUIRED: a) Prepare a detailed cash budget for the six-month period for each of the six months from 1 July to 31 December 2011. (30 Marks) b) Identify and describe six different purposes of budgeting. (10 Marks) c) Describe how the different purposes of budgets can conflict with each other. (10 Marks)