$65,000$ gallons of direct materials at December $31$ and has a target ending inventory of $51,000$ gallons at the end of the succeeding quarter.

Read the requirements.

Requirement $1.$ How many gallons of direct materials should Mahoney Company purchase during the $3$ months ending March $31?$

Begin by selecting the labels, then complete the schedule.

Direct Material Purchases Budget

Requirement $2.$ What questions might the CEO ask of the operating manager when reviewing the budget? $($Select three that apply.$)$

A$.$ Can target ending direct materials inventory be increased to allow for a larger supply in the following year?

B$.$ Is the increased finished goods ending inventory because of anticipated production or quality problems?

C$.$ Is the sales budget for finished units for the $3-$month period an amount that can be increased through increased production?

D$.$ Has the target finished goods ending inventory taken into account the level of employees required to produce the inventory needed to still be of good quality.

E$.$ Can fewer than $3$ gallons of direct materials be used to produce each unit of finished product by reducing waste and improving quality and efficiency?

F$.$ Can the target finished goods ending inventory be reduced so as to reduce inventory$-$related costs?