A. Pillow Unlimited makes decorative throw pillows for home use. The company sells the pillows to home dcor retailers for $14 per pillow. Each pillow requires 1.25 yards of fabric, which the company obtains at a cost of $6 per yard. The company would like to maintain an ending stock of fabric equal to 10% of the next month's production requirements. The company would also like to maintain an ending stock of finished pillows equal to 20% of the next month's sales. Sales (in units) are projected to be as follows for the first 3 months of the year: January February March 100,000 110,000 115,000 Requirements: Prepare the following budgets for the first three months of the year, as well as a summary budget for the quarter: 3. Prepare the direct materials purchases budget. Assume the company needs 150,000 yards of fabric for production in April. (7 points) B. Ali Al-Ghamdi, a newly appointed management accountant at Pillow Unlimited, was asked by the company director to prepare a cash budgeted and a budgeted income statement for the first quarter (January 1 - March 31) of the year. Al-Ghamdi was not happy of his director's request and this what he said: "We just finished preparing the company's annual financial reports including the income statement and the statement of cash flows and has been certified by our external auditor. The company's profitability exceeded the target for the year and the cash position was applauded by the auditor and top management... So why we do it again?". Comment on Ali Al-Ghamdi's remarks and the issues he raised. (4 points)