View the step-by-step solution to:


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:


  1. The finished goods inventory on hand at the end of each month must equal 2,000 units of Supermix plus 20% of the next month's sales. The finished goods inventory on June 30 is budgeted to be 13,000 units.
  2. 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 84,000 cc of solvent H300.
  3. 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 SalesJuly55,000August60,000September70,000October50,000November40,000December30,000



1. prepare production budget for Supermix for the months July, August, September, and October.

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.

Top Answer

1) For July: Production = Sales-Opening inventory+Closing inventory = 55000 -13000(June inventory) +(2000+0.2*60000) =56000... View the full answer

Screenshot 2020-01-02 at 8.49.06 PM.png

Sign up to view the full answer

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question