Pearl Products Limited of Shenzhen, China, manufactures and distributes toys thr
ID: 2548180 • Letter: P
Question
Pearl Products Limited of Shenzhen, China, manufactures and distributes toys throughout South East Asia. Three cubbc 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. The finished goods inventory on hand at the end of each month must equal 2,000 units of Supermix plus 25% of the next month's sales. The finished goods Inventory on June 30 is budgeted to be 17,250 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 93,375 CCof solvent H300. C. The company maintains no work in process inventories A monthily sales budget for Supermix for the third and fourth quaiters of the year follows. Budgeted Unit Sales 61, 000 66, 000 July August September 76, 000 October ,000 November 46,000 December 36,000 Required: L Prepare a production budget for Supermx for the months July, August, september, and october. 3. Prepare a direct materias 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 Required Required 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. Direct Materials Budget July August September Units of raw materials needed per unit finished Units of raw materials needed to meet Total units of raw materials n Units of raw materials to be hasedExplanation / Answer
Answer
Working
Working
July
August
September
October
November
A [given]
Budgeted Sales Unit
61000
66000
76000
56000
46000
B = 2000 + 25% of next month’s sale
Expected Ending Inventory
18500
21000
16000
13500
2000
C = A+B
Total Requirement
79500
87000
92000
69500
48000
D = Ending inventory of last month
Beginning Inventory
17250
18500
21000
16000
13500
E=C - D
Units to be produced
62250
68500
71000
53500
34500
Answer: Production Budget
July
August
September
October
Budgeted Sales Unit
61000
66000
76000
56000
Expected Ending Inventory
18500
21000
16000
13500
Total Requirement
79500
87000
92000
69500
Beginning Inventory
17250
18500
21000
16000
Units to be produced
62250
68500
71000
53500
Working
Working
July
August
September
October
S [given]
Units of Raw material per unit [cc]
3
3
3
3
A = S x Units to be produced calculated in Req 1
Units of raw material needed to meet productions [cc]
186750
205500
213000
160500
B = 50% of next months 'A'
Expected Ending Inventory [cc]
102750
106500
80250
0
C = A+B
Total Requirement [cc]
289500
312000
293250
160500
D = Ending inventory of last month
Beginning Inventory [cc]
93375
102750
106500
80250
E=C - D
Units of Raw material to be purchased [cc]
196125
209250
186750
80250
Answer
July
August
September
Third Quarter
Units of Raw material per unit [cc]
3
3
3
3
Units of raw material needed to meet productions [cc]
186750
205500
213000
605250
Expected Ending Inventory [cc]
102750
106500
80250
80250
Total Requirement [cc]
289500
312000
293250
685500
Beginning Inventory [cc]
93375
102750
106500
93375
Units of Raw material to be purchased [cc]
196125
209250
186750
592125
Working
July
August
September
October
November
A [given]
Budgeted Sales Unit
61000
66000
76000
56000
46000
B = 2000 + 25% of next month’s sale
Expected Ending Inventory
18500
21000
16000
13500
2000
C = A+B
Total Requirement
79500
87000
92000
69500
48000
D = Ending inventory of last month
Beginning Inventory
17250
18500
21000
16000
13500
E=C - D
Units to be produced
62250
68500
71000
53500
34500
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