In this case a full set of budgets will be prepared and presented in appropriate format.Reports will be prepared to state your assumptions and explain how budget numbers were determined. The following are general requirements for this budget case.Specific requirements are listed after the relevant case data. Read the case, state your assumptions, and analyze the information.Prepare an operating budget in standard “income statement” format.Prepare a narrative report, including your statements of assumptions (or notes to the income statement) addressing why/how quantitative items were selected.The following items must be explained:Sales ForecastPurchases budget (raw materials, labor, all resources)Operating ExpensesPrepare a cash budget using any acceptable format.The following items must be explained or shown on the budget:The process by which cash inflows were projected.The process by which cash outflows were projected.The process by which financing, if applicable, was determined.How interest and other financing charges were calculated.Prepare a capital budget using any acceptable format. You will be graded on the demonstration of your understanding of the underlying concepts related to determining budget amounts (for example, how purchases are determined) as well as your ability to prepare and explain standard business reports.(The rubric included in this Module will be used to grade the Project.)