You have been contracted as a consultant by Kakao Ltd. Kakao produces and sells high quality boxes of chocolates. Kakao is managed by its two owners and its fiscal year end is December 31st. It is January 4, 2022, and Kakao just completed its fifth year-end (December 31, 2021). The owners of Kakao are considering using a detailed Master Budget for the 2022 fiscal year to plan and control operations. You have been contracted to complete the following:

II. The owners of Kakao would like to improve cash flow. They have not taken a dividend since the companys inception, and they would like to start paying themselves dividends in 2022 without using any short-term financing. To accomplish this goal, they are considering the following changes: i. An increase in the sales price from $25.00 per unit to $26.50 per unit in 2022 (assume the change occurs January 1, 2022). ii. Tightening of credit terms to ensure more prompt collection of accounts receivable. Accounts receivable would now be collected as 80% in the quarter of sale and 20% in the following quarter. iii. The impact of the changes in (i) and (ii) is an anticipated drop in sales volume of 5% compared to the original estimates for every quarter for 2022 and 2023 If Kakaos owners want to leave $50,000 of cash in Kakao at the end of the 2022 fiscal year, what is the total amount of dividends that they can pay out of the company at December 31, 2022? III. The owners of Kakao have asked you to prepare a Report discussing the following: i. The overall importance/usefulness of budgeting ii. Difficulties faced relating to preparing the budget iii. Observations and recommendations you would make based on the Cash Budget prepared in Requirement I iv. The impacts of the changes made to the Budget in Requirement II v. Additional recommendations would you make to the company to improve its current situation a. You do not necessarily need to constrain your answer to include only those areas dealing with budgets