Hank Manufacturing makes cleaning solvent sold in large container with a plastic liner. Their monthly sales forecast consists of: January 40,000 units, February 38,500 units, and March 39,750 units. Desired ending inventory of finished goods (in units) is 10% of the next month's sales forecast. Planned production (in units) for next quarter is: January 43,800 units February 41,000 units March 50,250 units Further, each container of cleaning solvent consists of: 6 gallons of chemicals 1 plastic liner. Company policy requires that ending inventories of raw materials for each month be 15% of the next month's production needs. The policy was met for the ending inventory of December in the prior year. The cost of one gallon of chemicals is $2.00. The cost of one liner is $1.60.

1. Calculate the ending inventory of chemicals (in gallons) for December of the prior year, and then for January and February.

December, ending inventory:

January, ending inventory:

February, ending inventory:

2. Calculate the ending inventory of plastic coating (in units) for December of the prior year, and then for January and February.

December, ending inventory:

January, ending inventory:

February, ending inventory:

3. Prepare a direct materials purchases budget for the chemicals (in gallons) for January. Hint: A budget is still considered a financial statement.