EcoHouses, Ltd. buys straw bales from farmers at 2 { each, which it then treats with fungicide, before selling the bales for 4 ( each as a building material for eco-friendly" housing. The company is about to prepare it's budget for the next year, using the following figures: Sales 1,500,000 treated bales Variable treatment costs 0.75 6 per bale. (Bales are treated as soon as they are received) Expected opening stock 100,000 treated bales Budgeted closing stock 200,000 treated bales Direct labour costs 0.50 6 per treated bales Budgeted fixed costs 800.000 E Considering that the company uses variable costing: 1. Calculate the production quantities and its production cost budget, 2. Prepare the budgeted income statement for the next year