Reference no: EM131778942
Question - VV, Inc., manufactures and distributes toys throughout South East Asia. Four cubic centimeters solvent H300 are required to manufacture each unit of Supermix, one of the company's products the company is now 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) The finished goods inventory on hand at the end of each month must be equal to 2,000 units of Supermix plus 25% of the nex month's sales. The finished goods inventory on June 30 is budgeted to be 11,000 units.
b) The raw materials inventory on hand at the end of each month must be equal to 40% of the following month's production needs for raw materials. The raw materials inventory on June 30 is budgeted to be 59,600 cc of solvent H300.
c) The company maintains no work in process inventories.
A sales budget for Supermix for the last six months of the year follows.
Budgedted Sales in Units
July 36,000
August 41,000
September 49,000
October 32,000
November 24,000
December 18,000
Requirement 1 - Prepare a production budget for Supermix for the months July, August, September, and October. All amounts as positive values.
Requirement 2 - 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.
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