nces Exercise 8-10 Production and Direct Materials Budgets (LO8-3, LO8-4] Pearl Products Limited of Shenzhen, China, manufactures and distributes toys throughout Southeast Asia. Three cubic centimeters (cc) of solvent H300 are required to manufacture each unit of Supermix, one of the company's products. The company now is 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 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 14,800 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 90.000 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 59,000 July August 64,000 September 74,000 October 54,000 November 44,000 December 34,000