Saved Pearl Products Limited of Shenzhen, China, manufactures and distributes to

Question

Saved Pearl Products Limited of Shenzhen, China, manufactures and distributes toys throughout South East Asia. Three (cc) of solvent H300 are required to manufacture each unit of Supermix, one of the company's products. The company now is plann 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 good inventoryonhan d 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 14,800 units b. The raw materials inventory on hand at the end of each month m ust equa l one-half of the foll owing month's production needs for raw materials. The raw materials inventory on June 30 is budgeted to be 90,000 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 de year follows. Budgeted Unit Sales 59,000 64,800 74,000 54,000 44,000 34,000 uly August September October 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. Complete this question by entering your answers in the tabs below.

Explanation / Answer

Required 1

PRODUCTION BUDGET

Required 2

DIRECT MATERIALS BUDGET

July August September October Sales in units 59,000 64,000 74,000 54,000 Ending Inventory in units 15,800 [3,000+(64,000*20%)] 17,800 [3,000+(74,000*20%)] 13,800 [3,000+(54,000*20%)] 11,800 [3,000+(44,000*20%)] Total needs 74,800 81,800 87,800 65,800 Beginning Inventory in units (14,800) (15,800) (17,800) (13,800) Production in units 60,000 66,000 70,000 52,000

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