(a) A trading company has presented the following information: Months JanuaryFebruaryMarchApril Sales in Rs. 800,000700,000600,0006,000,000 The gross profit margin on sales will be 40%. The…

(a) A trading company has presented the following information:

MonthsJanuaryFebruaryMarchApril**Sales in Rs.**800,000700,000600,0006,000,000 The gross profit margin on sales will be 40%. The merchandize inventory will be equal to meet next months sales need. The operating expenses and selling expenses will be 10% and 20% of sales revenue respectively including depreciation 10,000 per month.

Required:

• Merchandize purchase budget for 1st three months ending March
• Operating and selling expenses budget for 1st three months ending March [3+2=5];

(b) What is standard costing? Explain any two difference between standard cost and estimated cost. [5]