Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Each gallon of Old Guard, a popular aftershave lotion, requires 2.5 ounces of ocean scent. Budgeted production of Old Guard for the first three quarters

Each gallon of Old Guard, a popular aftershave lotion, requires 2.5 ounces of ocean scent. Budgeted production of Old Guard for the first three quarters of 2016 is as follows:

Quarter I 12,000 gallons
Quarter II 18,000 gallons
Quarter III 12,000 gallons

Managements policy is to have on hand at the end of every quarter enough ocean scent inventory to meet 33% of the next quarters production needs. At the beginning of Quarter I, 9,900 ounces of ocean scent were on hand.

a. Calculate the number of ounces of ocean scent to be purchased in each of the first two quarters of 2016.

Number of ounces

Quarter 1:

Quarter 2:

b. Indicate why management plans for an ending inventory instead of planning to purchase each quarter the amount of raw materials needed for that quarters production. (Select all that apply.)

Inventory provides a cushion for delivery delays.

Inventory provides a cushion for production needs in excess of production forecast.

Inventory provides a cushion for payment delays.

Inventory provides a cushion for sales needs in excess of sales forecast.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

ISE Computer Accounting With Quickbooks Online

Authors: Donna Kay

2nd Edition

1260590933, 9781260590937

More Books

Students also viewed these Accounting questions

Question

Chapter 3 Homework - Ross

Answered: 1 week ago