Pearl Products Limited of Shenzhen, China, manufactures and distributes toys throughout South East Asia. Three cubic cen

[answerhappygod]

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:
The finished goods inventory on hand at the end of each month
must equal 4,000 units of Supermix plus 25% of the next month’s
sales. The finished goods inventory on June 30 is budgeted to be
21,250 units.
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 105,375 cc of solvent H300.
The company maintains no work in process inventories.
A monthly sales budget for Supermix for the third and fourth
quarters of the year follows.
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.