1. When a business entity, such as a manufacturing firm does not have a clear annual budget, it runs the risk of spending more money than it earns in a year. Even if production has been running smoothly for years, one small change can alter the entire financial picture. In addition, when applying for a business loan, the bank will need to see a formal budget as part of the business plan to consider the application. Required: Critically evaluate the importance of preparing a budget for a manufacturing company and discuss the behavioural issues arising from the budgeting process. In doing so, you may refer to the following guidelines: a) b) C) d) e) Explains the main purposes of budgeting. Outlines the functional budgets that are typically prepared for a manufacturing company. Differentiate between incremental and zero-based budgeting. Evaluate the advantages and limitations of preparing budgets for a manufacturing company. Discusses behavioural issues that may arise as part of the annual budgeting process