Question 6 (12 marks) Kohli Cricket Equipment Ltd manufactures cricket bats. Management is now preparing detailed budgets for the third quarter, July to September, and has assembled the following information to assist in preparing the budget: The Marketing Department has estimated sales in units as follows for the remainder of the year July August September 12,000 14,000 10,000 October November December 8,000 6,000 6,000 The company maintains finished goods inventories equal to 10% of the following month's sales. The inventory of finished goods on July 1 will be 2200 bats. Each cricket bat requires 2 kilograms of Willow Wood. To prevent shortages, the company would like the inventory of Willow Wood on hand at the end of cach month to be equal to 20% of the following month's production needs. The inventory of Willow Wood on hand on 31 July will be 5,440 kilograms. Required: (i) Prepare a production budget in units for each of the months, July to September. (3 marks) (ii) Prepare a direct material budget (in kilograms) for Willow Wood, for the month of August marks) (iii) What is budgetary slack? Provide TWO suggestions as to how an organisation can reduce the problems caused by budgetary slack. (3 marks) (iv) A manager of XYZ Pty Ltd made the following comment: "The whole budgeting process is a waste of time. I would rather my managers and finance staff focus on improving the business than spend time putting together detailed budgeting schedules". Critically evaluate this statement. (4 marks)