Daisy Products Limited of Shenzhen, China, manufactures and distributes toys throughout Southeast Asia.

Three cubic centimetres $($cc$)$ of solvent Q$80$ 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:

The finished goods inventory on hand at the end of each month must be equal to $2,550$ units of Fineclay plus $20\%$ of the next month$$s sales. The finished goods inventory on June $30$ is budgeted to be $8,500$ units.

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 $45,900$ cc of solvent Q$80.$

The company maintains no work$-$in$-$process inventories.

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

Budgeted Sales

in Units

July $29,750$

August $34,000$

September $42,500$

October $25,500$

November $17,000$

December $8,500$

Required:

$1.$ Prepare a production budget for Fineclay for the months of July to October.

$2.$ This part of the question is not part of your Connect assignment.

$3.$ Prepare a budget showing the quantity of solvent Q$80$ to be purchased for July, August, and September, and for the quarter in total.