If most companies find their forecasts are inaccurate, why should managers engage in budgeting at all? [8 marks]2. Abeng Corp, a rapidly-expanding crossbow distributor, is in the process of formulating plans for 2021. James Chambers, director of marketing, has completed his 2021 forecast and is confident that sales estimates will be met or exceeded. The following forecasted sales figures show the growth expected and will provide the planning basis for other corporate departments:Month Sales (units) Month Sales (units)January 7,200 July 12,000February 8,000 August 11,000March 7,200 September 12,800April 8,800 October 13,600May 10,000 November 12,000June 11,200 December 14,000Ellen Eglin, assistant controller, has been given responsibility for formulating the cash flow projections, a critical element during a period of rapid expansion. The following information will be used in preparing the cash analysis:i. Bows are sold at an average price of $150.ii. Abeng has experienced an excellent record in accounts receivable collection and expects this trend to continue. The company collects 30% of its billings in the month of sales, 50% in the first month following sale and the balance in the second month after sale. iii. The purchase of crossbows is Abeng’s largest expenditure; the cost of these items is 55% of sales. The company maintains an ending inventory equal to 60% of the next month’srequirements.iv. Prior experience shows that 75% of accounts payable is paid by Abeng 1 month after purchase and 25% in the second month after purchase.v. Wages, including fringe benefits, are a function of sales volume and are equal to 15% of the current month’s sales.2vi. Administrative expenses are projected to be $2,640,000 for 2021. All of these expenses are incurred uniformly throughout the year except for the property taxes. Property taxes are paid in four equal installments in the last month of each quarter. The composition of the expenses is:Salaries $480,000Promotion $660,000Property taxes $240,000Insurance $360,000Utilities $300,000Depreciation $600,000$2,640,000vii. A dividend of $150,000 will be paid in August.viii. In August, the company plans an issue of common stock, which is expected to raise $350,000.ix. Equipment with an original cost of $600,000 will be disposed of in September for $250,000. New equipment will be purchased in that month at a cost of $800,000. Payment will be made in two equal installments, in June and September.x. Income tax payments are made by Abeng in the first month of each quarter based on income for the prior quarter. The income tax rate is 35% and the firm’s net income for the second quarter of 2021 is projected to be $612,000.xi. Abeng has a corporate policy of maintaining a minimum end-of month cash balance of $150,000. The company maintains a line of credit to maintain this balance. Borrowings are made at the beginning of the month and interest (7%) is paid at the end of the month.Required:a. Prepare the following for the third quarter of the year:i. Sales budget [3 marks]ii. Schedule of cash collections [10 marks]iii. Purchases budget [10 marks]iv. Schedule of cash disbursement for purchases [7 marks]v. Cash budget [20 marks]b. Why is cash budgeting important for a rapidly expanding business such as Abeng? [10 marks