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 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 The finished goods inventory on hand at the end of each month must equal 2,000 units of Supermix plus 20 of the next months sales The finished goods inventory on June 30 is budgeted to be 13,000 units The raw materials inventory on hand at the end of each month must equal 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 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 55,000 August 60,000 September 70,000 October 50,000 November 40,000 December 30,000 Required 1 Prepare a production budget for Supermix for the months July, August, September, and October 2 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 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 Total needs Required production in units 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 August September Third Quarter Units of raw materials needed per unit of finished goods cc cc cc cc Units of raw materials needed to meet production Total units of raw materials needed Units of raw materials to be purchased

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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

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 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:

The finished goods inventory on hand at the end of each month must equal 2,000 units of Supermix plus 20% of the next months sales. The finished goods inventory on June 30 is budgeted to be 13,000 units.
The raw materials inventory on hand at the end of each month must equal 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.
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	55,000
August	60,000
September	70,000
October	50,000
November	40,000
December	30,000

Required:

1. Prepare a production budget for Supermix for the months July, August, September, and October.

2. 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.

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

Total needs

Required production in units

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		August		September		Third Quarter

Units of raw materials needed per unit of finished goods		cc		cc		cc		cc
Units of raw materials needed to meet production

Total units of raw materials needed

Units of raw materials to be purchased