10. Pearl Products Limited of Shenzhen, China, manufactures and distributes toys
ID: 2508277 • Letter: 1
Question
10.
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 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:
The finished goods inventory on hand at the end of each month must be equal to 3,000 units of Supermix plus 20% of the next month’s sales. The finished goods inventory on June 30 is budgeted to be 12,400 units.
The raw materials inventory on hand at the end of each month must be equal to one-half of the following month’s production needs for raw materials. The raw materials inventory on June 30 is budgeted to be 66,000 cc of solvent H300.
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 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 3,000 units of Supermix plus 20% of the next month’s sales. The finished goods inventory on June 30 is budgeted to be 12,400 units.
b.The raw materials inventory on hand at the end of each month must be equal to one-half of the following month’s production needs for raw materials. The raw materials inventory on June 30 is budgeted to be 66,000 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 July August September October November December Budgeted Sales in Units 47,000 52,000 62,000 42,000 32,000 22,000 Required: 1. Prepare a production budget for Supermix for the months July, August, September, and October Pearl Products Limited Production Budget LI AugustSeptember October Budgeted unit sales Total needs Required production in unitsExplanation / Answer
Solution 1:
Solution 2:
Production Budget - Pearl Prodcuts Ltd Particulars July August September October Sales units 47000 52000 62000 42000 Add: Desired ending inventory (20% of next month sales + 3000) 13400 15400 11400 9400 Total Needs 60400 67400 73400 51400 Less: Opening Inventory 12400 13400 15400 11400 Nos of units to be produced 48000 54000 58000 40000Related Questions
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