1) Babu Enterprise sells packaged baby foods for $50/unit and is preparing budget for the 1st quarter of 2020. His actual data of 2019 and budgeted data of 2020 include: Details . . . . . . . . . . . . Nov 2019 . . . Dec 2019 . . . Jan 2020 . . . Feb 2020 . . . Mar 2020 . . . Apr 2020 . . . May 2020 Sales in units . . . . . . . . . . 5900 . . . . . . 8700 . . . . . . 4500 . . . . . . 5700 . . . . . . . 6100 . . . . . . 5400 . . . . . . 5700 Owing to fall in demand selling price will be reduced by 20% in February. 40% of sales are cash sales and the remaining are credit sales. Credit sales are collected in the month following sales. Babu expects to keep an ending inventory level of 40% of the following months budgeted sales. Instructions: For the 1st quarter of 2020, prepare: (A) Sales Budget (3.5 marks), (B) Expected Cash Collection Schedule (3.5 marks) and (C) Production Budget for the 1st Quarter of 2020 (5 marks).

a) Why shouldnt Babu seek the cooperation of other business functions while preparing budgets? [2 marks]

b) Explain the difference between ROI and RI. Which one is preferable in making investment decisions. Why and why not?