[The following information applies to the question displayed below.]

Each gallon of Old Guard, a popular aftershave lotion, requires 3.25 ounces of ocean scent. Budgeted production of Old Guard for the first three quarters of 2016 is as follows:

Quarter I	13,000	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 28% of the next quarters production needs. At the beginning of Quarter I, 11,830 ounces of ocean scent were on hand.

1.

value: 4.00 points

Required information

Required:

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

Required information

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.