YummyBites Goodies Limited (YBG) specialises in producing three types of high-quality cakes: Chocolate, Strawberry and Vanilla. For a rich nutritional benefit, YBG uses Organic Eggs in all its cakes. YBG serves a niche market that Organic laying eggs were affected by a disease and organic eggs are in limited supply. Alice Swish, the Buying Manager has been informed by the organic eggs supplier that total annual organic eggs supply for 2023 is estimated to be limited to 7,800. YBG's financial year starts in September and ends on the 31st of August. The maximum market demand and organic eggs requirements per cake are shown below: Budgeted data year ending 31 August 2023 Maximum annual demand Organic eggs per cake Chocolate Strawberry 1,200 1,000 2 4 Vanilla 700 3 The selling prices, other raw materials and labour costs rates per cake for 2023 financial year will be the same as those in 2022. For quality assurance and freshness, YBG operates on a just-in-time production (JIT) method so that opening and closing inventory levels are zero. The sales director has already accepted an order for 500 Chocolates and if not fulfilled, would incur a financial penalty of 10,000. This contract order is not included in the Chocolate's maximum market demand figure. You are the Management Accountant and Clara Ores the Finance director has requested you to advise YBG's directors whether to: 1. first fulfil the contract and then prioritise production in the normal way or 2. breach the contract and incur the penalty. Actual results for the year ended 31 August 2022 Sales (units) Sales Revenue () Chocolate Strawberr Raw materials () Direct labour () Semi-Variable Overheads () Total Costs Recorded results for previous financial years is below: 900 72,000 32,000 21,000 10,120 63,120 y 600 Vanilla Total 400 1,900 39,000 44,000 155,000 11,000 14,000 57,000 13,000 12,000 46,000 9,670 7,480 27,270 33,670 33,480 130,270 Profit (Loss) () Actual results for the year ended 31 August 2021 Sales (units) Sales Revenue () Raw materials () Direct labour () Semi-Variable Overheads () Total Costs Profit/ (Loss) () 8,880 e Chocolat Strawberr 650 48,750 21,667 14,219 9,600 45,485 3,265 5,330 10,520 24,730 y 420 26,040 Vanilla Total 330 1,400 34,320 109,110 7,345 10,920 39,931 8,680 9,360 32,259 8,300 6,700 24,600 24,325 26,980 96,790 1,715 7,340 12,320 Required: Use management accounting techniques for example High-Low Method whereapplicable. 3.1 Applying marginal costing techniques, rank the products. marks above. 3.2 Prepare a budgeted production schedule and a marginal cost income statement (analysed by product including the total) for the year ending 31 August 2023 assuming that the Chocolate contract IS honoured 8 marks 3.3 Prepare a budgeted production schedule and a marginal cost income statement (analysed by product including the total) for the year ending 31 August 2023 assuming that the Chocolate contract IS NOT honoured 8 marks 3.4 Considering calculations above and other qualitative issues, advise YummyBites Goodies (YBG) directors whether to honour or dishonour the Chocolate Contract. marks 3.5 Budgeting serves various purposes including planning, control, motivation and communication. You have been requested by Clara Ores the Finance Director to explain to YBG directors the importance of budgeting in light ofthe purposes 3 5 marks 6