PROBLEM 9-15 Production and Direct Materials Budgets [LO3, LO4]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 ofSupermix, one of the company's products. The company is now planning raw materials needs forChapter 9the third quarter, the quarter in which peak sales of Supermix occur. To keep production and salesmoving smoothly, the company has the following inventory requirements:a. The finished goods inventory on hand at the end of each month must be equal to 3,000 units ofSupermix plus 20% of the next month's sales. The finished goods inventory on June 30 isbudgeted to be 10,000 units.b. The raw materials inventory on hand at the end of each month must be equal to one-halfof thefollowing month's production needs for raw materials. The raw materials inventory on June30 is budgeted to be 54,000 cc of solvent H300.c. The company maintains no work in process inventories.A sales budget for Supermix for the last six months of the year follows.Budgeted Salesin UnitsJuly .August..SeptemberOctober.35,00040,00050,00030,000November.December20,00010,000

Raw material means the material which is used while making the finished product. Budget means where…

PROBLEM 9-15 Production and Direct Materials Budgets [LO3, LO4] 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 Chapter 9 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 cach month must be equal to 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 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 54,000 cc of solvent H300. c. The company maintains no work in process inventories. A sales budget for Supermix for the last six months of the year follows. Budgeted Sales in Units 35,000 40,000 50,000 30,000 July August. September October. November December 20,000 10,000

PROBLEM 9-15 Production and Direct Materials Budgets [LO3, LO4] 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 Chapter 9 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 cach month must be equal to 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 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 54,000 cc of solvent H300. c. The company maintains no work in process inventories. A sales budget for Supermix for the last six months of the year follows. Budgeted Sales in Units 35,000 40,000 50,000 30,000 July August. September October. November December 20,000 10,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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