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:

1. The finished goods inventory on hand at the end of each month must be equal to 3,900 units of Fineclay plus 15% of the next month's sales. The finished goods inventory on June 30 is budgeted to be 13,000 units.
2. 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 70,200 cc of solvent Q80.
3. The company maintains no work-in-process inventories.

A sales budget for Fineclay for the last six months of the year follows:

\fDAISY PRODUCTS LIMITED Production Budget July August September October Total needsDAISY PRODUCTS LIMITED Raw Materials Purchases Budget Third July August September Quarter Total solvent Q80 needs

Answer rating: 100% (QA)

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