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Patrick Inc. makes industrial solvents sold in 5-gallon drums. Planned production in units (drums) for the first 3 months of the coming year is as
Patrick Inc. makes industrial solvents sold in 5-gallon drums. Planned production in units (drums) for the first 3 months of the coming year is as follows: January: 3.400 February: 2,500 March: 4,600 Each drum requires 4 gallons of chemicals. Company policy requires that ending inventories of raw materials for each month be 20% of the next month's production needs. This policy was met for the ending inventory of December in the previous year. On March 31, it is expected that there will be 4,700 gallons of chemicals on hand. The cost of one gallon of chemical is $3. Based on the above information, Patrick Inc. is currently preparing a direct materials purchase budget in the following format. January February March Quarter (a) Units to be produced (drums) Raw materials needed per unit (gallons) Production needs (gallons) Desired ending inventory Total needs in raw materials Beginning inventory Raw materials to be purchased (gallons) Cost of raw materials per gallon Total purchase cost of raw materials (b) $ $ (c) $ $ What is the desired ending inventory of raw materials for Quarter that will be shown in (a)? O 2,000 gallons 10.380 gallons 4.700 gallons O 11,800 gallons
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