Q2: QR Limited operates a chemical process that produces four different products Q, R, S and T from the input of one raw material plus water. Budget information for the forthcoming financial year is as follows: (000) Raw materials cost 268 Initial processing cost 464 Additional Product Output in litres processing cost Sales (1000) (000) Q 400000 768 160 R 90000 232 128 5000 9000 8 S T 32 240 The company policy is to apportion the costs prior to the split-off point on a method based on net sales value. Currently, the intention is to sell product S without further processing but to process the other three products after the split-off point. However, it has been proposed that an alternative strategy would be to sell all four products at the split-off point without further processing. If this were done the selling prices obtainable would be as follows: Per litre () ORS Q 1.28 1.60 6.40 T 20.00 You are required: a. to prepare budgeted profit statement showing the profit or loss for each product, and in total, if the current intention is proceeded with: b. to show the profit or loss by product, and in total, if the alternative strategy were to be adopted; c. To recommend what should be done and why, assuming that there is no more profitable alternative use for the plant.