Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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 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 13,250 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 60,000 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. Budgeted Sales in Units 41,000 46,000 56.000 July August September October 36,000 26,000 16,000 November December 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 Budgeted unit sales 36,000 41,000 46,000 56,000 9,500 Add: Desired units of ending finished goods inventory 12,000 17,000 14,500 55,500 Total needs 63,000 45,500 68,000 (13,250) Less: Units of beginning finished goods inventory (14,500) 48,500 (17,000) (12,000) 42,250 33,500 Required production in units 51,000 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 September Third Quarter August 126,750 Units of raw materials needed to meet production Add: Desired units of ending raw materials inventory Total units of raw materials needed Less: Units of beginning raw materials inventory Units of raw materials to be purchased
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started