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 2,000 units of Supermix plus 20% of the next month's sales. The finished goods inventory on June 30 is budgeted to be 13,000 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 84,000 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 55,000 60,000 70,000 July August September October November December 50,000 40,000 30,000 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.
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 2,000 units of Supermix plus 20% of the next month's sales. The finished goods inventory on June 30 is budgeted to be 13,000 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 84,000 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 55,000 60,000 70,000 July August September October November December 50,000 40,000 30,000 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.
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 2,000 units of Supermix plus 20% of the next month's
sales. The finished goods inventory on June 30 is budgeted to be 13,000 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 84,000 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
55,000
60,000
70,000
50,000
July
August
September
October
November
December
40,000
30,000
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.
< Prev
9 of 12
Nowy >
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
Budgeted unit sales
Total needs
Required production in units
Complete this question by entering your answers in the tabs below.
Units of raw materials needed per unit of finished goods
Units of raw materials needed to meet production
(Required 1
Total units of raw materials needed
Units of raw materials to be purchased
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
< Required 1
August
ec
Required 3 >
September
August
cc
September
Required 3>
October
c
Third Quarter
cc
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