2.2 REQUIRED Study the information given below that can be used to prepare the budgets of Product Chip and Product Nik for October 2018 and answer question 11-15.

INFORMATION

Chipnik Limited manufactures and sells two products, viz. Chip and Nik. The following information is available to determine the budget requirements for October 2018:

1. Projected sales for October and November 2018:

October November

15 000 units of Chip at R60 each 12 000 units of Chip at R44 each

5 000 units of Nik at R120 each 4 000 units of Nik at R84 each

2. The policy of Chipnik Limited is to maintain a closing inventory equal to 20% of the budgeted sales of the following month.

3. Direct labour hours required to produce one unit of each product and the rate per hour are as follows: Chip: 1 hour at R12 per hour Nik: 2 hours at R15 per hour.

2.2.1 Prepare a production budget (3 marks)

2.2.2 Prepare a direct labour budget (2 marks)