Fondi, Inc., bottles and distributes mineral water from the company’s natural springs in Italy. Fondi markets two products: 12-ounce disposable plastic bottles and 1-gallon reusable plastic container. Customers can return the reusable containers and get a $0.10 government rebate.

 

Required

1. For 2018, Fondi marketing managers project weekly sales of 100,000 12-ounce bottles and 40,000 1-gallon containers. Average selling prices are estimated at $0.50 per 12-ounce bottle and $1.65 per 1-gallon container. Prepare a revenues budget for Fondi, Inc., for the year ending December 31, 2018.  What would revenue be if Average Selling price increased by 10%?

2. Fondi begins 2018 with 380,000 1-gallon containers in inventory. The vice president of operations requests that 1-gallon containers ending inventory on December 31, 2018, be no less than 260,000 bottles. Based on sales projections as budgeted previously, what is the minimum number of 1-gallon container Fondi must produce during 2018?

3 The VP of operations requests that ending inventory of 1-gallon containers on December 31, 2018, be 300,000 units. If the production budget calls for Fondi to produce 1,200,000 1-gallon containers during 2018, what is the beginning inventory of 1-gallon containers on January 1, 2018?  Is it possible for the beginning inventory balance to be negative?