i) Prepare a production budget (in units) for OC I and OC II for 2018.

ii) Prepare a direct materials budget showing the cost of material A and B required to be purchased for 2018.

(iii) What is budgetary slack? Identify two (2) reasons for employees may create budgetary slack

(b) OriginCare Ltd manufactures two products: OC I and OC II. The company is now planning the raw material requirements of the two products for 2018. To produce the two products the following raw material is required Direct material Cost per kg Amount used per unit OC I OCII $3.50 per kilogram4 kilograms $5.60 per kilogram2 kilograms 1 kilograms To keep production smooth, the company has the following inventory requirements: The finished goods inventories (in units Finished good OCI OC II Expected 1st Januar 1000 units 2000 units Desired 31st December 500 units 800 units A sales budget for the two products for the vear 2018 follows Product OCI OC II Sales volume 7000 units 9000 units