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Daisy Products Limited of Shenzhen, China, manufactures and distributes toys throughout Southeast Asia. Three cubic centimetres (cc) of solvent Q80 are required to manufacture

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Daisy Products Limited of Shenzhen, China, manufactures and distributes toys throughout Southeast Asia. Three cubic centimetres (cc) of solvent Q80 are required to manufacture each unit of Fineclay, one of the company's products. The company is now planning raw materials needs for the third quarter, the quarter in which peak sales of Fineclay occur. To keep production and sales moving smoothly, the company has the following inventory requirements: a. The finished goods inventory on hand at the end of each month must be equal to 3,600 units of Fineclay plus 15% of the next month's sales. The finished goods inventory on June 30 is budgeted to be 12,000 units. b. The raw materials inventory on hand at the end of each month must be equal to one-half of the following month's production needs for raw materials. The raw materials inventory on June 30 is budgeted to be 64,800 cc of solvent Q80. c. The company maintains no work-in-process inventories. A sales budget for Fineclay for the last six months of the year follows: July August September Budgeted Sales in Units 42,000 48,000 60,000 October 36,000 November 24,000 December 12,000

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