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 20% of the next month's sales. The finished goods inventory on June 30 is budgeted to be 10,000 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 54,000 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 35,000 40,000 50,000 30,000 20,000 10,000 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.
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 20% of the next month's sales. The finished goods inventory on June 30 is budgeted to be 10,000 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 54,000 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 35,000 40,000 50,000 30,000 20,000 10,000 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:**Chapter 8 Homework**
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### Question 2
Pearl Products Limited of Shenzhen, China, manufactures and distributes toys throughout Southeast 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 20% of the next month’s sales. The finished goods inventory on June 30 is budgeted to be 10,000 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 54,000 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:
| Month | Budgeted Unit Sales |
|------------|---------------------|
| July | 35,000 |
| August | 40,000 |
| September | 50,000 |
| October | 30,000 |
| November | 20,000 |
| December | 10,000 |
**Required:**
1. Prepare a production budget for Supermix for the months of July, August, September, and October.
2. 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.
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**Notes:**
- This homework is focused on preparing production and direct materials budgets.
- The production budget involves determining how many units need to be produced to meet sales and inventory requirements.
- The direct materials budget involves calculating the quantity of solvent H300 needed for production and ensuring adequate raw material inventory.
**Graph/Diagram Explanation:**
There are no graphs or diagrams included in the provided content. The focus here is on text-based budgets and calculations.
Transcribed Image Text:**Chapter 8 Homework**
**Question 2**
**Required:**
1. Prepare a production budget for Supermix for the months of July, August, September, and October.
2. 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.
**Task:**
Complete this question by entering your answers in the tabs below.
**Tabs:**
- Required 1
- Required 3
**Table: Prepare a production budget for Supermix for the months of July, August, September, and October.**
| Pearl Products Limited Production Budget |
| ------ | ------ | ------ | ------ | ------ |
| | July | August | September | October |
| Budgeted unit sales | ______ | ______ | ______ | ______ |
| Total needs | ______ | ______ | ______ | ______ |
| Required production in units | ______ | ______ | ______ | ______ |
Click to fill out the required data in the respective sections.
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