Answer:
<u>Pearl Products Limited of Shenzhen, China
</u>
<u>Finished Goods Production Budget
</u>
<u>For the months of </u><em><u>July August Sept October November Dec
</u></em>
<em>Units required to </em> 51,750 55500 63,000 48,000 40,500 33,000
<em>meet Sales budget</em>
<em>Desired Ending </em> 22,500 37,600 20,000 17,500 15,000 <u> *15,000*</u>
<em>Inventory
</em>
<em>Total Units Req. </em> 74,500 93,100 83,000 65,500 55,500 48,000
<em>Less Estimated
</em>
<em>Beg. Inventory </em> 21,250 22,500 37,600 20,000 17,500 15,000
<u>Planned Production 53,250 70,600 45,400 45,500 38,000 33,000</u>
<u>Explanation:</u>
Working Notes:
Units required to meet Sales budget is calculated by multiplying 3/4 of the given months sales as 25 % of it is already included in that months opening inventory . For example July's unit required to meet sales budget would be 69,000 * 3/4= 51,750
Each month's beginning inventory is previous month's ending inventory
As no data for sales budget of January is given the desired ending inventory is taken on the basis of previous months desired inventory.
<u></u>
<u>Pearl Products Limited of Shenzhen, China
</u>
<u> Direct Materials Budget
</u>
<u>For the months of </u><em><u>July August Sept October November Dec
</u></em>
<em>Units to Meet </em>
<em>Production Budget 159,750 211,800 136,200 136,500 114,000</em>
<em>Desired Ending 105,900 68,100 68,250 57,000 49,500</em>
<em>Inventory</em>
<em>Less Beginning </em>
<em>Inventory 88,000 105,900 68,100 68,250 57,000</em>
<em>Direct Materials </em>
<u><em>Budget 177,650 174,000 136,350 125,250 106,500</em></u>
<u><em>Explanation:</em></u>
Working Notes:
Each finished goods units requires 3 units of direct material . The units to meet the production budget are estimated by multiplying them with 3. for example the July Production budget is 53,250 so it is multiplied with 3 to get the direct material required and 53,250 *3= 159,750