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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