2 Seri Sdn Bhd operates a chain of holiday resorts throughout Malaysia. The management wants to improvise its current budgetary control system by incorporating activity-based management and simple time series analysis. However, the Chief Executive Officer has some reservations to the effectiveness of this change. The budget for the planning and development department of the company is currently prepared as part of a traditional budgetary planning and control system. The analysis of cost by overheads for the period ended 30 September 2021 where this system is in use is as follows: Budgeted Actual % % Overheads Type Salaries and wages 12 Supplies Consultation and management fees Research and development costs Building rates 62 63 10 11 14 12 201 2 4 12 2 The total budget and actual costs of fixed production overheads for the department for the period ended 30 September 2021 are RM800,000 and RM950,000 respectively. For an activity- based costing approach, the company has identified a number of activities for the planning and development department, which has two divisions: Division I and Division 2. Total budget and actual costs that should be attributed to the activities have been identified based on the following: Budgeted Actual % % Activities Management and administration 22 20 Training 16 20 Holiday packages 121 15 Food promotion deals 32 30 Banquet services 18 15 The company has identified the most appropriate cost driver for each of the activities above. The management accountant was provided with the following list of cost drivers: Cost drivers Division Division 2 Training sessions 50 15 Number of customers 210 140 Administration hours 40,000 12,000 Number of promotion meals 30 20 Number of holiday packages 30 30 Required: a) Prepare two (2) budgetary control statements for the planning and development department for the period ended 30 September 2021, showing variances between the budget and actual costs, using the following: i. Traditional overhead-based analysis ii. Activity-based analysis 3 (18 marks) b) By using the most appropriate cost drivers, based on budgeted costs, calculate the attributable overheads for Division 1 and Division 2. (Figures are to be stated to the nearest round number). (12 marks) c) Explain briefly how time series can assist the management accountant for budgeting and forecasting purposes. (2 marks) d) Examine critically three possible problems that can be associated with improvising a budgetary control system and give suggestions to overcome these problems. (3 marks) (Total: 70 marks)