Homer 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 endiry inventory of finishd goods (in units) is 10% of the next month's sales forecast. Planned production (in units) for next quarter is: January: 43,800 units February: 41,000 units March: 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. 1. Calculate the ending inventory of chemicals (in gallons) for December of the prior year, and then for January and February.
Homer Manufacturing makes cleaning solvent sold in large container with a plastic liner. Their monthly sales
Planned production (in units) for next quarter is:
January: 43,800 units
February: 41,000 units
March: 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.
1. Calculate the ending inventory of chemicals (in gallons) for December of the prior year, and then for January and February.
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