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 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:

The finished goods inventory on hand at the end of each month must be equal to 2,000 units of Supermix plus 25% of the next month’s sales. The finished goods inventory on June 30 is budgeted to be 17,250 units.

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 80,000 cc of solvent H300.

A sales budget for Supermix for the last six months of the year follows.

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

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 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:

Sprint @. * 94% ? 4:27 PM ezto.mheducation.com 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 The finished goods inventory on hand at the end of each month must be equal to 2.000 units of Supermix plus 25% of the next month\'s sales. The finished goods inventory on June 30 is budgeted to be 17,250 units. 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 80,000 cc of solvent H300. The company maintains no work in process inventories. A sales budget for Supermix for the last six months of the year follows. Required Prepare a production budget for Supermix for the months July. August, September, and October Production Budget 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 Direct Materials Budg

Solution

1 Production budget July August September Total Bugeted units sales 61000 66000 76000 203000 Add Ending inventory 18500 21000 16000 16000 Total needs 79,500 87,000 92,000 2,19,000 Less beginning inventory 17250 18500 21000 17250 Units to be produced 62,250 68,500 71,000 201750 2 Direct material budget April May June Total Number of units produced 62,250 68,500 71,000 2,01,750 Basis of units 3 3 3 3 Production needs 1,86,750 2,05,500 2,13,000 6,05,250 Add ending material inventory 102750 106500 80250 80250 Total material requirements 289500 312000 293250 685500 Less beginning material inventory 80000 102750 106500 80000 Material to be purchased 209500 209250 186750 605500