Pearl Products Limited of Shenzhen China manufactures and di

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 2,000 units of Supermix plus 25% of the next month\'s sales. The finished goods inventory on June 30 is budgeted to be 14,250 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 75,375 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 August September October November December Budgetec Unit Sales 49,000 54,000 64,000 44,000 34,000 24,000 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 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 August September Third Quarter equired production in units of finished goods Units of raw materials needed per unit of finished goods Units of raw materials needed to meet production 50.250 56,500 59.000 165,750 Desired units of ending raw materials inventory Total units of raw materials needed 75,375 75,375 ess: Units of beginning raw materials inventory Units of raw materials to be purchased

Solution

Pearl Products limited Direct material budget July August September Quarter Required production in units of finished goods                                50,250                                   56,500                                                                                                       59,000                                                                                                    165,750 Units of raw material needed per unit of finished goods                                           3                                              3                                                                                                                 3                                                                                                                 3 units of raw material needed to meet production 50,250*3 = 150,750 56,500*3 = 169,500 59,000*3 = 177,000 165,750*3 = 497,250 Add: Desired units of ending raw material inventory 169,500*0.5 = 84,750 177,000*0.50 = 88,500 ((44,000+(34,000*25%)-(44,000*25%)*3)*0.50 = 62,250 ((44,000+(34,000*25%)-(44,000*25%)*3)*0.50 = 62,250 Total units of raw material needed                              235,500                                 258,000                                                                                                    239,250                                                                                                    559,500 Less: Units of beginning raw material inventory                                75,375 169,500*0.5 = 84,750 177,000*0.50 = 88,500                                                                                                       75,375 Units of raw material to be purchased                              160,125                                 173,250                                                                                                    150,750                                                                                                    484,125