16 Problem 9-38 Production and Materials Budgets (LO 9-3, 9-6, 9-7) Empire Chemical Company produces three products using three different continuous processes. The products are Yarex, Darol, and Norex. Projected sales in gallons for the three products for the years 20x2 and 20x3 are as follows: 1.1 points 8 03:24:18 Norex Yarex Darol 20x2 135,000 145,000 95,000 85,000 65,000 75,000 20x3 eBook References Inventories are planned for each product so that the projected finished-goods Inventory at the beginning of each year is equal to 8 percent of that year's projected sales. Because of the continuous nature of Empire's processes, work-in-process Inventory for each of the products remains constant throughout the year. The raw-material requirements of the three products are shown in the following chart. Raw Material Units Unit Price Yarex Darol Norex Gamma pounds $ 9.00 0.2 0.4 Murad pounds 7.00 0.4 0.5 Islin gallons 5.00 1.0 0.7 0.5 Tarden gallons 11.00 0.3 0.5 Raw-material Inventories are planned so that each raw material's projected Inventory at the beginning of a year is equal to 10 percent of the previous year's usage of that raw material. The conversion requirements in hours per gallon for the three products are Yarex, 0.09 hour; Darol, 0.12 hour; and Norex, 0.18 hour. The conversion cost of $15 per hour is considered 100 percent variable.