The following information regarding Toti Ltd, which manufactures only one product, is available for 2022: Toti Ltd expects to sell 8 000 units at R400 per unit. Each unit requires 4 kg of materials at a cost of R25 per kg and 0.5 hours of direct labour at a cost of R60 per hour. Variable manufacturing overheads are estimated at R40 per direct labour hour. Fixed costs are budgeted at R1 600 000. ENG

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.