Question 2 Amin Arts produces and sells affordable artistic letter boards. The companys financial controller is compiling the budget data for the first quarter of 2021. The following information will be used in preparing the companys operating budgets: Monthly budgeted sales for the first six months of 2021: Month Units January 8,800 February 9,500 March 10,000 April 7,500 May 8,500 June 9,200 Each letter board sells for RM25. The company ends each month with enough finished goods inventory to cover 20% of the next months sales. Ending finished goods inventory as of 31 December 2020 are 1,760 units. A new automated production equipment will be installed on January 1, and this will reduce the direct labour per letter board from 0.75 hour to 0.5 hour. The company pays its production labours RM10 per direct labour hour. Each letter board requires 0.05 cubic meters of pine planks. Pine planks cost RM120 per cubic meter. The company ends each month with enough wood to cover 10% of the next months production needs. A total of 44 cubic meters of pine planks are on hand as of 31 December 2020. The company uses direct labour hours to allocate manufacturing overhead to production installation of new automated production equipment will increase total fixed manufacturing overhead cost to RM40,000 per month, of which RM5,000 is depreciation. Required: a. Compute the total budgeted sales revenue of Amin Arts for the first quarter ended March 31, 2021. (2 mark) b. Prepare the following budgets for Amin Arts for the months of January, February and March 2021, and for the quarter (total): i. Production budget ii. Direct materials budget (in cubic meters and costs) iii. Direct labour budget iv. Manufacturing overhead budget (17 marks) c. Compute the unit product cost of the letter board. (3 marks) d. One of the limitations of participative budgeting is budgetary slack. Explain why managers are encouraged to introduce slack into their budgets and provide ONE way a company can reduce the problem of budgetary slack. (3 marks) [TOTAL: 25 MARKS]