Earhart Reliable Tools makes two products, namely #587Q and #253X, that use similar raw materials in production. Estimated production needs for a unit of each product are as follows:

	#587Q	#253X
Steel (in kg)	2	4
Wood (in metres)	0.5	0.2
Direct labour (in hours)	3	6
Machine hours	0.5	3

Estimated sales in units by product for 2019 are 40 000 of #587Q and 15 000 of #253X. Additionally, estimated beginning and desired ending inventory quantities for 2019 are as follows:

	Beginning	Ending
Steel (in kg)	1 000	700
Wood (in metres)	400	300
#587Q	400	320
#253X	600	450

Each kg of steel retails at R10 per kg and wood at R5 per metre. Variable overhead is applied to production at the rate of R16 per machine hour and the direct labour wage rate is R12.50 per hour. Fixed overhead are budgeted at R500 000 for 2019.

Required:

2.1       Prepare the following for 2020:

• Production Budget                                                                                      (8)
• Direct Material Purchases Budget                                                            (14)
• Direct labour Budget                                                                                   (4)
• Overhead Budget                                                                                        (6)

Answer rating: 100% (QA)

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