Question 3: The forecast of costs and revenues of Smith Limited includes the following:

YEAR 1 YEAR 2 Oct Nov Dec Jan Feb March Rs RS Rs RS RS RS Direct materials 50,000 45,000 60,000 40,000 30,000 35,000 Direct wages 40,000 36,000 44,000 32,000 24,000 28,000 Overhead 31,000 28,000 38,000 36,000 33,000 37,000 Research costs 4,000 5,000 5,000 6,000 6,000 7,000 Sales 160,000 200,000 240,000 200,000 160,000 160,000