Luxury Bed Pty Ltd.s balance sheet at December 31, 2016 is shown below:

Balance Sheet December 31, 2016
Assets
Current Assets
Cash		$7,500
Accounts receivable		$73,500
Finished goods inventory (1500 units)		$24,000
Total current assets		$105,000
Property, plant, and equipment
Equipment	$40,000
Less: Accumulated depreciation	$10,000	$30,000
Total Assets:		$135,000
Liabilities
Notes payable		$25,000
Accounts payable		$45,000
Total Liabilities		$75,000
Stockholders Equity
Common stock	$40,000
Retained earnings	$25,000
Total stockholders equity		$65,000
Total liabilities and stockholders equity		$135,000

Budgeted data for the year 2017 includes the following:

2017
	Quarter 4	Total
Sales budget (8,000 units at $32)	$76,800	$256,000
Direct materials used	17,000	62,500
Direct labour	12,500	50,900
Manufacturing overhead applied	10,000	48,600
Selling and administrative expenses	18,000	75,000

Additional Information:

To meet sales requirements and to have 2,500 units of finished goods on hand on December 31, 2017, the production budget shows 9,000 required units of output. The total unit cost of production is expected to be $18. The company uses the first-in, first-out (FIFO) inventory costing method. Interest expense is expected to be $3,500 for the year. Income taxes are expected to be 40% of income before income taxes, in 2017, the company expects to declare and pay $8,000 cash dividends.

The companys cash budget shows and expected cash balance of $5,880 on December 31, 2017. All sales and purchases are on account. It is expected that 60% of quarterly sales are collected in cash within the quarter and the remainder is collected in the following quarter. Direct materials purchased from suppliers and paid 50% in the quarter incurred and the remainder in the following quarter. Purchases in the fourth quarter were the same as the materials used. In 2017, the company expects to purchase additional equipment costing $9,000. $4,000 of depreciation expense on equipment is included in the budget data and split equally between manufacturing overhead and selling and administrative expenses.

The company expects to pay $8,000 on the outstanding notes payable balance plus all interest due and payable to December 31 (included in interest expense $3,500, above). Accounts payable at December 31, 2017, includes amounts due suppliers (see above) plus other accounts payable of $7,200. Unpaid income taxes on December 31 will be $5,000.

a) Discuss all the primary benefits of budgeting to the CEO of Luxury Bed Pty Ltd. Provide detailed information.

b) How may a Luxury Beds budget report for the second quarter differ from the first quarter? Provide a detailed explanation.