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Pearl Products Limited of Shenzhen, China, manufactures and distributes toys throughout Southeast Asia. Three cubic centimeters ( cc ) of solvent H 3 0 0
Pearl Products Limited of Shenzhen, China, manufactures and distributes toys throughout Southeast Asia. Three cubic centimeters cc
of solvent 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 units of Supermix plus of the next month's
sales. The finished goods inventory on June is budgeted to be units.
b The raw materials inventory on hand at the end of each month must equal onehalf of the following month's production needs for
raw materials. The raw materials inventory on June is budgeted to be cc of solvent
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:
Required:
Prepare a production budget for Supermix for the months July, August, September, and October.
Prepare a direct materials budget showing the quantity of solvent HOO to be purchased for July, August, and September, and for
the quarter in total.
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