Question

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 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 4.000 units of Supermix plus 25% of the next month's sales. The finished goods inventory on June 30 is budgeted to be 18.250 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 87.375 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. July August September October November December Budgeted Unit Sales 57,880 62,880 72,000 52, 42,eee 32,080 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. ® Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 3 Prepare a production budget for Supermix for the months July, August, September, and October Pearl Products Limited Production Budget August 82.000 September 72.000 October 52.000 57.000 Budgeted unit sales Add: Desired units of ending raw materials inventory Total needs Less: Units of beginning finished goods inventory Required production in units Required 1 Required 3 > Required 1 Reguired 1 Required 3 Required Prepare a direct materials budget showing the quantity of solvent H300 to be purchased for July, August, and September, and for the quarter ir total. Pearl Products Limited Direct Materials Budget July August September Third Quarter c e ce Units of raw materials needed per unit of finished goods I Units of raw materials needed to meet production Total units of raw materials needed Units of raw materials to be purchased < Required 1 Required 3 )

Answer 1

X Pearl Products limited of shenzhen ching ROS 1 Pegal products Limited Production Bygget July August Budgeted sales cunits) 57000 62,000 Add: Desided Ending Inv. (C4) 19500 22000 TOT Needs 176500 84000 Less: Beg finished Goods Ink (18250) (19500) Requided prod in units - 58250 64500 Septembes Octobes 72000 52000 17000 14500 89000 66500 (22000) (17000) 67000 1 49500 D Ending Inuen := 4000 unit + 25% of next month's sales July : Aug sep.: act: 4000 + 4000 + 4000 + 4000 + 162000 X 251) - 1 72000 x 250) (52000x259) (42000 x 25% - 19500 22000 17000 14500 Peqol Products Limited Direct material Budget July Aug sep Bocor Pequl ca pooduction Cunits) - 58250 64500 67000 189750 mat H300 Needed per unit x 3 cclx 3 cc x3 cc x3 cca Production needs cec 174750 193500 201000 569250 1. Desized ending Inventory 96750 100 500 742 50 14250 Total material H300 needed 274500 294000 275250 643500 Beginning Inventoryccc) (87375) (96750) (100 500) (87375) WS OF Dew mat to be pubchased 184125 1197250 174750 556125 Add: Desized

Desised ending Inventory O uly & (v nug: seP 193500 X 1/2 201000 X V2 49500 x 3 CC XV = = - 8 96 750 100500 74250