Task 03 1. The management of Mercury Apparel Limited recently identified that the most of controlling issues are derived in the production floor because of improper budgetary system. Having much thoughtful discussion at the Board Meeting recently held, the company decided to establish a new budgetary system in the company. You as the newly recruited Management Accountant, explain following to the related personnel. Describe the purposes of budgeting, (5 marks) . Explain the zero-based budgeting and how does it differ from other traditional forms of budgeting (5 marks) 2 Mercury Apparel Limited manufactures three products, known as Venus, Texus and Miracle. The following information is available for 2019. The budgeted sales of Mercury Apparel Limited for 2019 are as follow: Produse Sales unit. That sciling price Vienas 20,000 Teres 18.00020 Miracle 15.00022 The opening stocks at the beginning of the year 2019 Product Produit. Compared Vers 100 Te 1000 8 Miracle.000 000 b 20.00 The marketing director intends to run a marketing campaign towards the end of 2019 and has requested that product unit stocks should be increased at the end of 2019 above the commencement stocks by the following Venus increased by 20% Texus increased by 50% Miracle increased by 20% The purchasing director has requested that all components part stocks be reduced by 20% at the end of 2019 because of improved delivery times from suppliers The product material specification and component cost for each of the products and are as follows: The product material specification and component cost for each of the products and are as follows: Component part A B E Part cost (each) 50 cents 35 cents 60 cents 55 cents Rs. 1 Product Component parts per product Venus 31 4 6 20 1 Texus 21 3 4 2 1 Miracle The standard labour usage for each product and labour rates are as follows. Venus 2 Hours Texus 4 Hours Miracle 3 Hours Standard labor rate per hour is Rs.2.00 Budgeted cash flows are as follows. Quarter 1 Quarter 2 Quarter 3 Quarter 4 Rs Rs Rs Rs Receipts from customers 250000 300000 280000 246250 Payments: Materials 100000 120000 110000 136996 Payments for wages 100000 110000 120000 161547 Other costs and expenses 30000 25000 18004 3409 Cash balance as at 31 December 2018 was Rs. 8500. You are asked to prepare the sales budget, production budget, material usage budget, material purchase budget, direct labour budget and cash budget for the year ending 31" December 2019. Discuss the expected performance of the company at the budget committee meeting. (20 marks)