A Berhad manufactures and sells a single product X, which uses two different raw materials in its production. The current selling price of X is $75 per unit, which will increase by 10% from the beginning of month 4. The sales budget is forecast as follows: Month 1. 2. 3. 4. 5 Sales units 5,500 6,300 6,500 5,000 5,800 The following information is available relating to the production of each unit of product X: Material A 2.5kg at $4 per kg Material B. 3.5kg at $5 per kg Direct labour grade I 1.5 hours at $9 per hour Direct labour grade II. 1.25 hours at $6 per hour The firm expects a 10% increase in the cost of both materials and a 5% rise in direct labour costs, to be effective from the start of month 3. Opening inventory from the beginning of month 1 are expected to be as follows: Product X 1,100 units Material A 7,075kg Material B 9,905kg The closing inventory of product X at the end of each month should be equal to 20% of the following month's sales. The closing inventory of both materials at the end of each month should be equal to 50% of the material usage for the following month. Required: (a) Prepare the following for each months of 1, 2, 3 and 4: (i) Sales budget (RM) (ii) Production budget in units (b) Prepare the following for each months 1, 2 and 3: (i) Material purchases budget in kg and RM for material A only (ii) The labour budgets in hours and RM for direct labour grade II only (c) Briefly explain the differences between fixed and flexible budgets. (4 marks) (4 marks)