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Please solve it step by step urgently Q.2 XYZ Ltd which manufactures and sells one product is preparing its budget for the three months, July,

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Q.2 XYZ Ltd which manufactures and sells one product is preparing its budget for the three months, July, August and September 2007. Forecast sales are as follows: Puly August September October Units 18,000 22,000 24,000 20,000 21,000 November The company aims: - to carry finished goods stock equal to 50% of the following month's sales at the end of each month. to maintain raw material stocks at the end of each month equal to 20% of next month's production requirements. Stocks on 30 June are expected to be: Finished goods 9000 units Material A001 8,000 kg Material B001 12,000 kg Standard product details, forecast prices and fixed overheads for the next 3 months are:- Material A0001 RS.4 per kg Material B0001 Rs.6 per kg Direct labor 1.5 hours at Rs.4 per kg Variable production overheads Rs.2 per labor hour Variable selling overheads 2.5% of sales value Rs.50 per unit Forecast selling price Fixed overheads: Production Selling and distribution Administration Rs.324,000 Rs.125,000 Rs.105,000 Required: (a) Prepare the following budgets for each month and in total for 3 months Production in units - Purchases for Material B 001 in kg and Rs. (b) Prenare a budgeted Profit and loss Account in marinal costing format for the 3 month period ending 30 September (e) Suggest 2 reasons for preparing a Purchasing budget

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