NOTE: This assignment contains 3 SEPARATE questions. They concern the same business but should be reated as if no information overlaps from one question to the next. Please take careful care of the spacing, dollar signs, and underlines in the budgets and reports you create. 1) Mulla Medical is a corporate pharmaceutical business. They make a prescription antibiotic, Anacilin. Information about the budget for 2023 is as follows: a. The company expects to sell 7,000 bottles of Anacilin in January, 6,000 in February, 10,000 in March, and 8,000 in April. b. A bottle of Anacilin requires 6 ounces of chemical A and 3.5 ounces of chemical B. c. For the first quarter of 2023 , the desired ending inventory of finished bottles is equal to 8% of next month's sales, whereas desired ending inventory for material is 12% of the next month's production requirements. d. There are 1,600 bottles of Anacilin, 4,800 ounces of Chemical A, and 2,400 ounces of Chemical B on hand at the beginning of 2023. e. At the end of April, the company must have 1,000 bottles of Anacilin, 8,000 ounces of Chemical A, and 4,000 ounces of Chemical B to meet its needs starting in May. f. The cost of Chemical A is $1.05 per ounce, the cost of Chemical B is $0.15 per ounce, and the selling price of Anacilin is $12.00 per bottle. g. The cost of direct labour is $0.55 per bottle, and the cost of variable overhead is $0.75 per bottle. Fixed manufacturing overhead is $3,000 per quarter. Required: Prepare a production budget ( 4 marks), and Material purchases budget (for both Chemical A and B) ( 6 marks) for the first four months of 202, Prepare a single budgeted income statement per bottle. Fixed manufacturing overhead is $3,000 per quarter. Required: Prepare a production budget ( 4 marks), and Material purchases budget (for both Chemical A and B) ( 6 marks) for the first four months of 202 , Prepare a single budgeted income statement that covers January 1- April 302023 (4 marks). 2) In a separate department, Mulla Medical makes a probiotic, Banacilin. This department had the following results in 2022: Fixed costs are charged to expense in the period incurred. The department's balance sheet as of the end of 2022 were as follows: Additional Information: a. Sales are expected to increase by 7% in the next quarter. b. All sales are on credit with 50% collected in the quarter of the sale and the rest in the following quarter. c. Variable cost of sales consists of 40% materials, 40% direct labour, and 20% variable overhead. Materials are purchased on credit. Sixty percent are paid for in the quarter of Additional Information: a. Sales are expected to increase by 7% in the next quarter. b. All sales are on credit with 50% collected in the quarter of the sale and the rest in the following quarter. c. Variable cost of sales consists of 40% materials, 40% direct labour, and 20% variable overhead. Materials are purchased on credit. Sixty percent are paid for in the quarter of purchase, and the remaining is paid in the next quarter. There is no inventory. Also, direct labour and variable overhead are paid for in the in the quarter the expenses are incurred. d. Fixed production costs (other than $5,000 depreciation expense) are expected to increase by 1.5%. Fixed production costs requiring payment are paid in the quarter they are incurred. e. Fixed selling and admin expenses (other than $3,000 office depreciation) are expected to increase by 3%. Fixed selling and admin costs requiring payment are paid in the quarter they are incurred. f. The tax rate is 40%. Taxes are paid in the quarter incurred. g. No purchases of furniture and equipment are expected in the first quarter of 2023. Required: Prepare a budgeted income statement ( 5 marks) and cash budget ( 6 marks) for the first quarter of 2023. Prepare a budgeted balance sheet ( 6 marks) as of the end of the first quarter of 2023. 3) Mulla Medical has significant problems in 2022 . Sales and production were down by nearly 35% as compared to the budget. Manufacturing had many quality problems and had lots of customer complaints. The division manager recently received a report comparing his division's actual costs with the costs in the master budget prepared January 2022. They were surprised to see that actual costs were less than budgeted, so they had many favourable variances. This manager went to his meeting with the company president to discuss performance. Although sales were down, at least they could discuss a large number of favourable variances. Required: Explain why the variances are positive, discuss how flexible budgeting might have helped this manager go to his meeting better prepared to face the president. Assuming the president understands flexible budgeting, will they be impressed by this division's favourable variances? ( 3 marks)