Sparkling Designs $($Pty$)$ Ltd $($Sparkling Designs$)$ is a well$-$known jewellery

manufacturer that uses only the highest quality natural diamonds in three final

products: necklaces, earrings and rings. The recent increase in demand in laboratorygrown diamonds, which are approximately $30\%$ to $50\%$ cheaper than natural

diamonds, had a negative impact on Sparkling Designs$$ sales. Management therefore

considers changing the current once$-$a$-$year budgeting process to a rolling budgeting

process to keep a closer eye on projected figures.

The following forecasts were made for the financial year ending $31$ December $2024$:

Final

products

Estimated Sales Direct labour Inventory on hand

Units

$(1$ unit $=$

$1$ mg$)$

Rand

per unit

Hours Rand

per hour

Opening

units

Closing

units

Necklaces $2201500083005065$

Earrings $4401000062104550$

Rings $300800051802030$

A mixture of three raw materials, metal flux, gold and diamonds, are used in the

production of the final products.

Metal flux, gold and diamonds are mixed in the following ratios per final product:

$$ Necklaces $=1$:$3$:$6$

$$ Earrings $=0$:$2$:$8$

$$ Rings $=4$:$5$:$1$

The forecasted figures for the raw materials are as follows:

Raw material Inventory on hand

Rand per mg Opening mg Closing mg

Metal flux $10003015$

Gold $30001510$

Diamonds $50006040$Prepare the following budgets for the financial year ended $31$ December $2024$:

$3\mathrm{.}1$ Production budget in units. $(6$ marks$)$

$3\mathrm{.}2$ Direct materials purchases budget. $(15$ marks$)$

$3\mathrm{.}3$ Direct labour budget. $(6$ marks$)$

$3\mathrm{.}4$ Briefly provide two $(2)$ advantages and two $(2)$ disadvantages when budgets

are updated continuously.

$(2$ x $2$ marks$)$

Show and reference all your calculations clearly.

Round your answers to two decimal places where required.