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: a. The finished goods inventory on hand 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 10,000 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 54,000 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. Budgeted Unit Sales 35,000 40,000 50,000 30,000 20,000 10,000 July August September October November 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.
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: a. The finished goods inventory on hand 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 10,000 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 54,000 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. Budgeted Unit Sales 35,000 40,000 50,000 30,000 20,000 10,000 July August September October November 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.
Managerial Accounting: The Cornerstone of Business Decision-Making
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Chapter9: Profit Planning And Flexible Budgets
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![Exercise 8-10 (Static) Production and Direct Materials Budgets [LO8-3, LO8-4]
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:
a. The finished goods inventory on hand 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 10,000 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 54,000 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.
Budgeted
Unit Sales
July
August
September
October
November
December
35,000
40,000
50,000
30,000
20,000
10,000
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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F15a526c6-de52-4025-8530-5e7aa950042d%2F0ede5678-4873-473d-9d92-71f25a4e2697%2Fykxyc1m_processed.png&w=3840&q=75)
Transcribed Image Text:Exercise 8-10 (Static) Production and Direct Materials Budgets [LO8-3, LO8-4]
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:
a. The finished goods inventory on hand 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 10,000 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 54,000 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.
Budgeted
Unit Sales
July
August
September
October
November
December
35,000
40,000
50,000
30,000
20,000
10,000
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.
Transcribed Image Text:Complete this question by entering your answers in the tabs below.
Required 1 Required 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.
Units of raw materials needed per unit of finished goods
Units of raw materials needed to meet production
Total units of raw materials needed
Units of raw materials to be purchased
Pearl Products Limited
Direct Materials Budget
July
CC
< Required 1
August
CC
Required 3
September
CC
Third Quarter
CC
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