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 planning its 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 3,000 units of Supermix plus 25% of the next month's sales. The finished goods inventory on June 30 is budgeted to be 13,250 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 63,375 cc of solvent H30O. 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 July August September October 41,000 46,000 56,000 36,000 26,000 16,000 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.
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 planning its 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 3,000 units of Supermix plus 25% of the next month's sales. The finished goods inventory on June 30 is budgeted to be 13,250 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 63,375 cc of solvent H30O. 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 July August September October 41,000 46,000 56,000 36,000 26,000 16,000 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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 planning its
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 3,000 units of Supermix plus 25% of the next month's
sales. The finished goods inventory on June 30 is budgeted to be 13,250 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 63,375 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.
Budgeted
Unit Sales
41,000
46,000
56,000
36,000
26,000
16,000
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.
Transcribed Image Text: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
July
August
September
October
Budgeted unit sales
Total needs
Required production in units
< Required 1
Required 3 >
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
July
August
September
Third Quarter
Units of raw materials needed per unit of finished goods
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 >
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