1. Calculate the ending inventory of chemicals (in gallons) for December of the prior year, and then for January and February. (3points--must use a formula/calculation in each cell)December, ending inventory:January, ending inventory:February, ending inventory:2. Calculate the ending inventory of plastic coating (in units) for December of the prior year, and then for January and February.(3 points--must use a formula/calculation in each cell)December, ending inventory:January, ending inventory:February, ending inventory:3. Prepare a direct materials purchases budget for the chemicals (in gallons) for January. (13 points--must use aformula/calculation when necessary). Hint: A budget is still considered a financial statement. All required formatting for afinancial statement must be included! Hank Manufacturing makes cleaning solvent sold in large container with a plastic liner. Their monthly sales forecast consists of: January40,000 units, February 38,500 units, and March 39,750 units. Desired ending inventory of finished goods (in units) is 10% of the nextmonth's sales forecast.Planned production (in units) for next quarter is:JanuaryFebruaryMarch43,800 units41,000 units50,250 unitsFurther, each container of cleaning solvent consists of:6 gallons of chemicals1 plastic linerCompany policy requires that ending inventories of raw materials for each month be 15% of the next month's production needs.The policy was met for the ending inventory of December in the prior year. The cost of one gallon of chemicals is $2.00. The costof one liner is $1.60.

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Description: 1. Calculate the ending inventory of chemicals (in gallons) for December of the prior year, and then for January and February. (3points--must use a formula/calculation in each cell)December, ending inventory:January, ending inventory:February, endin

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Hank Manufacturing makes cleaning solvent sold in large container with a plastic liner. Their monthly sales forecast consists of: January 40,000 units, February 38,500 units, and March 39,750 units. Desired ending inventory of finished goods (in units) is 10% of the next month's sales forecast. Planned production (in units) for next quarter is: January February March 43,800 units 41,000 units 50,250 units Further, each container of cleaning solvent consists of: 6 gallons of chemicals 1 plastic liner Company policy requires that ending inventories of raw materials for each month be 15% of the next month's production needs. The policy was met for the ending inventory of December in the prior year. The cost of one gallon of chemicals is $2.00. The cost of one liner is $1.60.

Hank Manufacturing makes cleaning solvent sold in large container with a plastic liner. Their monthly sales forecast consists of: January 40,000 units, February 38,500 units, and March 39,750 units. Desired ending inventory of finished goods (in units) is 10% of the next month's sales forecast. Planned production (in units) for next quarter is: January February March 43,800 units 41,000 units 50,250 units Further, each container of cleaning solvent consists of: 6 gallons of chemicals 1 plastic liner Company policy requires that ending inventories of raw materials for each month be 15% of the next month's production needs. The policy was met for the ending inventory of December in the prior year. The cost of one gallon of chemicals is $2.00. The cost of one liner is $1.60.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.

Topic Video

Question

1. Calculate the ending inventory of chemicals (in gallons) for December of the prior year, and then for January and February. (3
points--must use a formula/calculation in each cell)
December, ending inventory:
January, ending inventory:
February, ending inventory:
2. Calculate the ending inventory of plastic coating (in units) for December of the prior year, and then for January and February.
(3 points--must use a formula/calculation in each cell)
December, ending inventory:
January, ending inventory:
February, ending inventory:
3. Prepare a direct materials purchases budget for the chemicals (in gallons) for January. (13 points--must use a
formula/calculation when necessary). Hint: A budget is still considered a financial statement. All required formatting for a
financial statement must be included!

Hank Manufacturing makes cleaning solvent sold in large container with a plastic liner. Their monthly sales forecast consists of: January
40,000 units, February 38,500 units, and March 39,750 units. Desired ending inventory of finished goods (in units) is 10% of the next
month's sales forecast.
Planned production (in units) for next quarter is:
January
February
March
43,800 units
41,000 units
50,250 units
Further, each container of cleaning solvent consists of:
6 gallons of chemicals
1 plastic liner
Company policy requires that ending inventories of raw materials for each month be 15% of the next month's production needs.
The policy was met for the ending inventory of December in the prior year. The cost of one gallon of chemicals is $2.00. The cost
of one liner is $1.60.

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