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 2,000 units of Supermix plus 25% of the next month's sales. The finished goods inventory on June 30 is budgeted to be 11,250 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 57,375 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 37,000 July August September 42,000 52,000 October 32,000 November 22,000 December 12,000 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. Required 1 Required 3 Prepare a production budget for Supermix for the months July, August, September, and 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 Pearl Products Limited Production Budget July August September October 37,000 42,000 52,000 32,000 12,500 15,000 10,000 7,500 49,500 57,000 62,000 39,500 11,250 12,500 15,000 10,000 38,250 44,500 47,000 29,500 Required 1 Required 3 Prepare a direct materials budget showing the quantity of solvent H300 to be purchased for July, August, and September, a Required production in units of finished goods Units of raw materials needed per unit of finished goods Units of raw materials needed to meet production Total units of raw materials needed Units of raw materials to be purchased Pearl Products Limited Direct Materials Budget July August 38,250 44,500 September 47,000 Third Quarter CC CC