Purchase Solution

Old Guard: Materials Budget & Reason for Ending Inventory

Not what you're looking for?

Ask Custom Question

Each gallon of Old Guard, a popular aftershave lotion, requires 3 ounces of ocean scent. Budgeted production of Old Guard for the first three quarters of 2013 is:

Quarter I 13,000 gallons
Quarter II 18,000 gallons
Quarter III 12,000 gallons

Management's policy is to have at the end of every quarter enough ocean scent inventory to meet 28% of the next quarter's production needs. At the beginning of Quarter I, 10,920 ounces of ocean scent were on hand.

a. Calculate the number of ounces of ocean scent to be purchased in each of the first two quarters of 2013
Quarter I Quarter II
Number of ounces

b. Indicate why management plans for an ending inventory instead of planning to purchase each quarter the amount of raw materials needed for that quarter's production. (Select all that apply.)

1. Inventory provides a cushion for delivery delays.
2. Inventory provides a cushion for production needs in excess of production forecast.
3. Inventory provides a cushion for payment delays.
4. Inventory provides a cushion for sales needs in excess of sales forecast.

Purchase this Solution

Solution Summary

See Excel attached for schedules to guide you and instructional notes. Click in cells to see computations.

Solution provided by:
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
Recent Feedback
  • "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
  • "Thank, this is more clear to me now."
  • "Awesome job! "
  • "ty"
  • "Great Analysis, thank you so much"
Purchase this Solution


Free BrainMass Quizzes
Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

Motivation

This tests some key elements of major motivation theories.