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 companys 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 months sales. The finished goods inventory on June 30 is budgeted to be 19,250 units.

b. The raw materials inventory on hand at the end of each month must be equal to one-half of the following months production needs for raw materials. The raw materials inventory on June 30 is budgeted to be 84,000 cc of solvent H300.

c. The company maintains no work in process inventories.

A sales budget for Supermix for the last six months of the year follows.

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 19,250 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 84,000 cc of solvent H300. c. The company maintains no work in process inventories. A sales budget for Supermix for the last six months of the year follows. July August September October November December Budgeled Sales in Units 65.000 70.000 80.000 60.000 50.000 40.000 Required: 1. Prepare a production budget for Supermix for the months July, August, September, and October. August 70.000 September 80.000 October 60,000 Pearl Products Limited Production Budget July Budgeted unit sales 85,000 Add: Desired units of ending finished goods inventory Total needs Lese: Units of beginning finished goods Inventory Required production in units 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. Pearl Products Limited Direct Materials Budget July Units of raw materials needed to meet production August September Third Quarter Total units of raw inaterials needed Units of raw materials to be purchased