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 thecompany’s products. The company is now planning raw materials needs for the third quarter, the quarter inwhich peak sales of Supermix occur. To keep production and sales moving smoothly, the company has thefollowing inventory requirements:a. The finished goods inventory on hand at the end of each month must be equal to 3,000 units of Supermixplus 20% of the next month’s sales. The finished goods inventory on June 30 is budgeted to be 10,000units.b. The raw materials inventory on hand at the end of each month must be equal to one-half of the followingmonth’s production needs for raw materials. The raw materials inventory on June 30 is budgeted to be54,000 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.Budgeted Sales1. Prepare a production budget for Supermix for the months July, August, September, and October.2. Examine the production budget that you prepared in (1) above. Why will the company produce moreunits than it sells in July and August, and fewer units than it sells in September and October?3. Prepare a direct materials budget showing the quantity of solvent H300 to be produced?