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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 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:
A monthly sales budget for Supermix for the third and fourth quarters of the year follows.
Budgeted Unit Sales
July 69,000
August 74,000
September 84,000
October 64,000
November 54,000
December 44,000
Required:
Question 1: Prepare production budget for Supermix for the months July, August, September, and October.
Question 2: Prepare direct materials budget showing the quantity of solvent H300 to be purchased for July, August, and September, and for the quarter in total.
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