Question 2 Viktorija is the owner of Babywell Ltd., a company that manufactures and sells cushions for newborn babies. Although Viktorija is very passionate about her job and is specialised in marketing, she does not have accounting knowledge, therefore she has asked you to prepare a budget for the coming quarter, based on the following information. 1) Based on a recent market research study, Viktorija has identified the following forecasted sales for the period from Aug 2021 to Dec 2021. Aug Sep Nov Dec Budgeted Sales (units) 5,000 5,000 6,000 7,200 7,500 Babywell Ltd. expects to sell each cushion for 75 in the coming months. 2) Customers of Babywell Ltd. are provided the following sales collection terms: 80% of the sales are collected in the month of sale, while 20% in the following month. The company holds account receivables for 25,000 to be collected in full at start of Aug 2021. Oct 3) The company plans to hold stock of finished goods equal to 40% of the budgeted sales for the following month. At the end of Jul 2021, Babywell Ltd holds finished good stocks inventory of 450 units. 4) To manufacture each cushion, 4 kg of raw material are required. Babywell Ltd expects to keep raw material inventory at the end of each month to be equal to 10% of the following month's production requirements. Raw material costs 6 per kg and 1,500 kg of raw material were at hand at the end of Jul 2021. 5) The company incurs a fixed overhead charge of 20,000 per month. Insurance is paid every month for 3,000. Staffs employed are paid collectively a monthly salary of 140,000 with no overtime. A tax liability of 4,500 is due every month. 6) Cash opening balance at start of Aug 2021 is 12,000. e) Describe the steps in the budgeting process, discussing advantages and limitations (max. 400 words). Explain the concept of zero based budgeting and how it differs from traditional budgeting (max. 400 words). [8 marks]