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Exercise 8-3 Production and Direct Materials Budgets [LO8-4]

2 Exercise 8-10 Production and Direct Materials Budgets (LO8-3, LO8-4 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 now is planning 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 10 points eBook References a. The finished goods inventory on hand at the end ofeach month must equal 4,000 units of Supermt plus 20%ofthe next months sales. The finished goods inventory on June 30 is budgeted to be 16.600 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 96,000 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 Augast Septesbet Oetobe r e, 000 58,000 ,000 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. K Prev 2 of t0 Next

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