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 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 4,000 units of Supermix plus 25% of the next months sales. The finished goods inventory on June 30 is budgeted to be 18,250 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 87,375 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 57,000

August 62,000

September 72,000

October 52,000

November 42,000

December 32,000

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.

Complete this question by entering your answers in the tabs below.

Required 1

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

Pearl Products Limited

Production Budget

July August September October

Budget unit sales ? ? ? ?

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Total needs ? ? ? ?

Required production in units ? ? ? ?

Required 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 August September Third Quarter

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Units of raw materials neede per unit of finished goods ? ? ? ?

Units of raw materials needed to meet production ? ? ? ?

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Total units of raw material needed ? ? ? ?

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Units of raw materials to be purchased ? ? ? ?