Patrick Inc. makes industrial solvents sold in 5-gallon drums. Planned production in units forthe first 3 months of the coming year is:January 43,800February 41,000March 50,250Each drum requires 5.5 gallons of chemicals and one plastic drum. Company policy requiresthat ending inventories of raw materials for each month be 15% of the next month’s productionneeds. That policy was met for the ending inventory of December in the prior year. The cost ofone gallon of chemicals is $2.00. The cost of one drum is $1.60. (Note: Round all unit amountsto the nearest unit. Round all dollar amounts to the nearest dollar.)Required:1. Calculate the ending inventory of chemicals in gallons for December of the prior year andfor January and February. What is the beginning inventory of chemicals for January?2. Prepare a direct materials purchases budget for chemicals for the months of January andFebruary.3. Calculate the ending inventory of drums for December of the prior year and for Januaryand February.4. Prepare a direct materials purchases budget for drums for the months of January andFebruary
Patrick Inc. makes industrial solvents sold in 5-gallon drums. Planned production in units for
the first 3 months of the coming year is:
January 43,800
February 41,000
March 50,250
Each drum requires 5.5 gallons of chemicals and one plastic drum. Company policy requires
that ending inventories of raw materials for each month be 15% of the next month’s production
needs. That 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 drum is $1.60. (Note: Round all unit amounts
to the nearest unit. Round all dollar amounts to the nearest dollar.)
Required:
1. Calculate the ending inventory of chemicals in gallons for December of the prior year and
for January and February. What is the beginning inventory of chemicals for January?
2. Prepare a direct materials purchases budget for chemicals for the months of January and
February.
3. Calculate the ending inventory of drums for December of the prior year and for January
and February.
4. Prepare a direct materials purchases budget for drums for the months of January and
February
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