Question
In: Accounting
Flubber Inc. makes a bouncy clay alternative. Their “Boing-Boing” brand clay requires two gallons of whole...
Flubber Inc. makes a bouncy clay alternative. Their “Boing-Boing” brand clay requires two gallons of whole milk for each package. Selected data from the Flubber’s master budget for the next quarter are shown below:
| April | May | June | |
| Budgeted sales (units) | 32,000 | 37,000 | 30,000 |
|
Budgeted production (units) |
28,000 | 30,000 | 36,000 |
|
Desired ending inventory of milk (gallons) |
3,000 | 3,600 | 2,700 |
How many gallons of milk should Flubber Inc. purchase in May?
Solutions
Expert Solution
Answer: 60,600 gallons
.
.
| Budgeted production for May (a) | 30,000 | packages |
| Number of gallons required for each package (b) | 2 | gallons |
| Total number of gallons needed for production (a x b) | 60,000 | gallons |
| Plus: Desired ending inventory for May | 3,600 | gallons |
| Total number of gallons needed | 63,600 | gallons |
| Less: Beginning inventory [Is equal to desired ending inventory for April] | 3,000 | gallons |
| Number of gallons needed to be purchased | 60,600 | gallons |
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