Posh, Inc., bottles and distributes mineral water from the company’s natural springs in northern Oregon. Posh markets two products: 12- ounce disposable plastic bottles and 1- gallon reusable plastic containers.

Required

1. For 2013, Posh marketing managers project monthly sales of 420,000 12- ounce bottles and 170,000 1- gallon containers. Average selling prices are estimated at $ 0.20 per 12- ounce bottle and $ 1.50 per 1- gallon container. Prepare a revenues budget for Posh, Inc., for the year ending December 31, 2013. What questions might the CEO ask of the marketing manager when reviewing the budget?

2. Posh begins 2013 with 890,000 12- ounce bottles in inventory. The vice president of operations requests that 12- ounce bottles ending inventory on December 31, 2013, be no less than 680,000 bottles. Based on sales projections as budgeted previously, what is the minimum number of 12- ounce bottles Posh must produce during 2013? What questions might the CEO ask of the operating manager when reviewing the budget?

3. The VP of operations requests that ending inventory of 1- gallon containers on December 31, 2013, be 240,000 units. If the production budget calls for Posh to produce 1,900,000 1- gallon containers during 2013, what is the beginning inventory of 1- gallon containers on January 1, 2013?