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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

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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: Yarex Darol Norex 20x2 138,000 98,000 68,000 20x3 148,000 88,000 78,000 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. . Norex Darol 0.7 Raw Material Gamma Murad Islin Tarden Units pounds pounds gallons gallons Unit Price $12.00 10.00 5.00 14.00 Yarex 0.5 0.7 1.3 1.0 0.6 0.8 0.8 0.8 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, 0.06 hour; Darol, 0.09 hour, and Norex, 0.15 hour. The conversion cost of $15 per hour is considered 100 percent variable. Required: 1. Determine Empire Chemical Company's production budget (in gallons) for the three products for 20x2. 2. Determine Empire Chemical Company's conversion cost budget for 20x2. 3. Assuming the 20x1 usage of Islin is 350,000 gallons, determine the company's raw-material purchases budget (in dollars) for Islin for 20x2. 4-a. Assume that for 20x2 production, Empire Chemical Company could replace the raw material Islin with the raw material Philin. The usage of Philin would be the same as the usage of Islin. However, Philin would cost 20 percent more than Islin and would cut production times on all three products by 10 percent. Compare cost of using Philin over using Islin. 4-b. Which raw material should the management use for the 20x2 production

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