Exercise 7-10 Production and Direct Materials Budgets [LO7-3, Lo7-4] Pearl Products Limited of Shenzhen, China, manufactures and distributes toys throughout South East Asia. Three cubic centimeters (cc) of solvent H300 are required to manufacture each unit of Supermix, 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 Supermix 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 3,000 units of Supermix plus 25% of the next month's sales. The finished goods inventory on June 30 is budgeted to be 13,250 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 63,375 cc of solvent H300. The company maintains no work in process inventories. Supermix for the last six months of the year follows. A sales budget for Budgeted Sales in Units July 41,000 46,000 August 56,000 September 36,000 October 26,000 November 16,000 December Required 1. Prepare a production budget for Supermix for the months July, August, September, and October Pearl Products Limited Production Budget July August September october Budgeted unit sales Add: Desired units of ending finished goods inventory Total needs Less: Units of beginning finished goods inventory Required production in units