50.1K

Verified Solution

Link Copied!

Pearl Products Limited of Shenzen, China manufactures and distributes toys throughout South East Asia. Three cubic centimeters $($cc$)$ of solvent H$300$ are required to manufacture each unit of Supermix, one of the other company$$s products. The company is planning its raw materials needs for the third quarter, the quarter, the quarter in which peak sales of Supermix occur. To keep production and sales moving smoothly, the company has had the following inventory requirements.

A$.$ The finished goods inventory on hand at the end of each month must equal $2,000$ units of Supermix plus $20\%$ of the next month$$s sales. The finished goods inventory on June $30$ is budgeted to be $15,400$ 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 $102,000$ cc of solvent H$300.$

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:

Budget Unit Sales

July $67,000$

August $72,000$

September $82,000$

October $62,000$

November $52,000$

December $42,000$

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 H$300$ to be purchased for July, August, and September, and for the quarter in total.

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

Pearl Products Limited

Production Budget

Budget Unit Sales July August September October

Total Needs

Required Production in Units

July August September Third Quarter

Units of Raw Materials Needed Per

Units of Finished Goods

Units of Raw Materials Needed

to Meet Production

Total Units of Raw Materials Needed

Units of Raw Materials To Be Purchased

Answer & Explanation Solved by verified expert

See Answer