1. Alpha Ltd has appointed you as a manager in the budgeting department. The company has provided the following information to prepare a cash flow budget for the six months from the 1 January 2021 to 30 June 2021. Alpha Ltd produces only one type of product and the projected selling price of the product is 2 for January and February and after that will be fixed at 3 for the foreseeable future. For the first three months of the year, 2,000 units will be sold per month. For the following three months, 2,500 units will be sold per month. Sales income is to be received in the month of sale. Insurance costs are 200 every two months. The company will pay for insurance on 1 December 2020. iv. The company is paying 20% of sales of each month as bonus to the employees in the following month. The total sales during December 2020 will be 5,000. v. Alpha Ltd will pay overhead costs of 2,000 each month. vi. The opening cash balance at 1 January 2021 will be 1,000. vi. The monthly cost of direct material and direct labour is estimated to be 500 and the company will pay them during each month. vii. Fixed costs of production are 100 per month, payable in the month. Required: Prepare a cash flow budget for the period 1 January 2021 to 30 June 2021 and indicate the closing balance as at 30 June 2021. (20 marks) 2. Comment on how companies can benefit by preparing budget and what are the potential drawbacks of budgeting. Word limit is 750 words (+/- 10%) (25