K Ltd. produces and markets a very popular product called 'X'. The company is interested in presenting its budget for the second quarter of 2023. The following information are made available for this purpose: (a) It expects to sell 1,50,000 bags of 'X' during the second quarter of 2023 at the selling price of 1,200 per bag. (b) Each bag of 'X' requires 2.5 mtr. of raw material 'Y' and 7.5 mtr. of raw material 'Z'. (c) Stock levels are planned as follows: 1. Particulars Finished Bags of 'X' (Nos.) Raw Material 'Y' (mtr) Raw Material 'Z' (mtr) Empty Bag (Nos.) (d) 'Y' cost 160 per mtr., 'Z' costs 30 per mtr. and 'Empty Bag' costs *110 each. (e) It requires 9 minutes of direct labour to produce and fill one bag of 'X'. Labour cost is 70 per hour. Variable manufacturing costs are 60 per bag. Fixed manufacturing costs 40,00,000 per quarter. (g) Variable selling and administration expenses are 5% of sales and fixed administration and selling expenses are 3,75,000 per quarter. Required Prepare a production budget for the said quarter in quantity. 2. Beginning of Quarter 45,000 96,000 1,71,000 1,11,000 3. End of Quarter 33,000 78,000 1,41,000 84,000 Prepare a raw material purchase budget for 'Y', 'Z' and 'Empty Bags' for the said quarter in quantity as well as in rupees. Compute the budgeted variable cost to produce one bag of 'X'. Mr. X has +2,00,000 investments in his business firm. He wants a 15 percent return on his money. From an analysis of recent cost figures, he finds that his variable cost of operating is 60 percent of sales, his fixed costs are t80,000 per year. Show computations to answer the following questions: (i) What sales volume must be obtained to break even? (ii) What sales volume must be obtained to get 15 percent return on investment? (ii) Mr.X estimates that even if he closed the doors of his business, he would incur t25,000 as expenses per year. At what sales would he be better off by locking his business up?