Question

Please assist with question below. Thank you!

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 20 % of the next month's sales. The finished goods inventory on June 30 is budgeted to be 19,000 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 114,000 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 Unit Sales 75,000 se,000 90,000 70,000 60,000 5e,000 July August September October November December 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 1

Solutions:

F G H Pearl Products Ltd Production Budget July August September 750001 800001 90000 October 70000 Particulars Budgeted unit Sales Add: Desired ending inventory (20% of next month sales + 4000) Total Needs Less: Beginning Inventory 20000 95000 19000 22000 102000 20000 18000 108000 22000 16000 86000 18000 Budgeted production in units 76000 nool 82000 86000 68000 September 86000 Third Quarter 244000 Pearl Products Ltd Material Purchase Budget Particulars July August Budgeted production in units 76000 82000 Material needed per unit (Cubic Centimeters) Units of Material needed to meet produce (Cubic Centimeters) 2280001 246000 Add: Desired units of material in ending inventory (50% of following month needs) 123000 129000 Total units of raw material needed 351000 375000 Less: units of material in beginning inventory 114000 123000 258000 732000 102000 360000 102000 8340001 129000 114000 Units of raw material to be purchased 237000 2520001 231000 720000 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 Sheet367 Sheet367 (2) Sheet633 ) Sheet634 She