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Daisy Products Limited of Shenzhen, China, manufactures and distributes toys throughout Southeast Asia. Three cubic centimetres (cc) of solvent Q80 are required to manufacture each unit of Fineclay, one of the companys products. The company is now planning raw materials needs for the third quarter, the quarter in which peak sales of Fineclay occur. To keep production and sales moving smoothly, the company has the following inventory requirements:

1. The finished goods inventory on hand at the end of each month must be equal to 3,300 units of Fineclay plus 15% of the next months sales. The finished goods inventory on June 30 is budgeted to be 11,000 units.
2. The raw materials inventory on hand at the end of each month must be equal to one-half of the following months production needs for raw materials. The raw materials inventory on June 30 is budgeted to be 59,400 cc of solvent Q80.
3. The company maintains no work-in-process inventories.

A sales budget for Fineclay for the last six months of the year follows:

	Budgeted Sales in Units
July		38,500
August		44,000
September		55,000
October		33,000
November		22,000
December		11,000

Required: 1. Prepare a production budget for Fineclay for the months of July to October.

2. This part of the question is not part of your Connect assignment. 3. Prepare a budget showing the quantity of solvent Q80 to be purchased for July, August, and September, and for the quarter in total.

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