Question

pearl products

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 company's 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: a. The finished goods inventory on hand at the end of each month must equal 3,000 units of Supermix plus 20% of the next month's sales. The finished goods Inventory on June 30 is budgeted to be 10,000 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 54,000 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 Rugas September Osober November December 40.000 30.000 30.000 20.000 10,000

Answer 1

1
Pearl Products Limited
Production Budget
	July	August	September	October
Budgeted unit sales	35000	40000	50000	30000
Add: Desired units of ending finished goods inventory	11000	13000	9000	7000
Total needs	46000	53000	59000	37000
Less: Units of beginning finished goods inventory	10000	11000	13000	9000
Required production in units	36000	42000	46000	28000
3
Pearl Products Limited
Direct Materials Budget
	July	August	September	Third Quarter
Required production in units of finished goods	36000	42000	46000	124000
Units of raw materials needed per unit of finished goods	3	3	3	3
Units of raw materials needed to meet production	108000	126000	138000	372000
Add: Desired units of ending raw materials inventory	63000	69000	42000	42000
Total units of raw materials needed	171000	195000	180000	414000
Less: Units of beginning raw materials inventory	54000	63000	69000	54000
Units of raw materials to be purchased	117000	132000	111000	360000