E9.24 LO 9.3 9.7 Budgeting production and direct materials purchases: manufacturer Venus Sweets is a manufacturer of a popular range of confectionery. Venus budgets on an annual basis, and largely bases its estimates on an incremental adjustment to last year's results. The production manager for its Space Explorer snack is planning for the financial year. Note that the equivalent of two units of raw material are required to produce one unit of finished product. Raw material Work in process Finished goods Required January 1 35000 12 000 80000 December 31 45000 12 000 50000 1. If Venus Sweets plans to sell 480 000 units during the year, compute the number of units the firm would have to manufacture during the year. 2. If 500 000 finished units were to be manufactured by Venus Sweets during the year, determine the amount of raw material to be purchased. 3. With reference to the Real Life titled 'Beyond budgeting? Limitations, uses and adaptations of budget processes' in the section 'Responsibility accounting', what common problems can be observed in Venus Sweets' approach to budgeting? What business and industry circumstances might exacerbate such problems? REAL LIFE