Exercise 8-10 (Algo) Production and Direct Materials Budgets (L08-3, L08-4) 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 planning its 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 equal 3,000 units of Supermix plus 20% of the next month's sales. The finished goods inventory on June 30 is budgeted to be 12,400 units. b. The raw materials inventory on hand at the end of each month must equal one-half of the following month's production needs for raw materials. The raw materials inventory on June 30 is budgeted to be 72,000 cc of solvent H300. c. The company maintains no work in process inventories. A monthly sales budget for Supermix for the third and fourth quarters of the year follows. Budgeted Unit Sales July 47,eee August 52,890 September 62, eee October 42,890 November 32,800 December 22, eee Required: 1. Prepare a production budget for Supermix for the months July, August, September, and October. 3. Prepare a direct materials budget showing the quantity of solvent H300 to be purchased for July, August, and September, and for the quarter in total. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. July Required 1 Required 3 Prepare a direct materials budget showing the quantity of solvent H300 to be purchased for July, August, and September, and for the quarter in Pearl Products Limited Direct Materials Budget August September Third Quarter Required production in units of finished goods 48,000 54,000 58,000 160,000 Units of raw materials needed per unit of finished goods 39 cc 3 CC 34CC Units of raw materials needed to meet production 144,000 162,000 174,000 480,000 Add: Desired units of ending raw materials inventory 81,000 87,000 60,000 60,000 225,000 Total units of raw materials needed 249,000 234.000 540,000 Less: Units of beginning raw materials inventory 66,000 81,000 87.000 66,000) 159.000) Units of raw materials to be purchased 168,000 147,000 474,000 39CC