Patrick Inc. makes industrial solvents sold in 5-gallon drum containers. Planned production in units for the first 3 months of the coming year is: January February March 43,800 41,000 Each drum requires 5.5 gallons of chemicals and one plastic drum container Company policy requires that ending inventories of raw materials for each month be 15% of the next month's production needs. 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 drum is $1.60. Required: Ending invertory for December Ending inventory for January Ending inventory for February Beginning inventory for January 50,250 1. Calculate the ending invertery of chemicals in gallons for December of the prior year, and for January and February: What is the beginning inventory of chemicals for January? Round your answers to the nearest whole gallon headed 2. Prepare a direct materials purchases budget for chemicals for the months of January and February. De not include a multiplication symbol as part of your answer Patrick Inc. Direct Materials Purchases Budget-Chemicals in Gallons For the Months of January and February January February gations gallone geliene gelens

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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.