Revenues and production budget
Response to the following problem:
Purity, Inc., bottles and distributes mineral water from the company's natural springs in northern Oregon. Purity markets two products: twelve-ounce disposable plastic bottles and four-gallon reusable plastic containers.
1. For 2010, Purity marketing managers project monthly sales of 400,000 twelve-ounce bottles and 100,000 four- gallon containers. Average selling prices are estimated at $0.25 per twelve-ounce bottle and $1.50 per four-gallon container. Prepare a revenues budget for Purity, Inc., for the year ending December 31, 2010.
2. Purity begins 2010 with 900,000 twelve-ounce bottles in inventory. The vice president of operations requests that twelve-ounce bottles ending inventory on December 31, 2010, be no less than 600,000 bottles. Based on sales projections as budgeted above, what is the minimum number of twelve-ounce bottles Purity must produce during 2010?
3. The VP of operations requests that ending inventory of four-gallon containers on December 31, 2010, be 200,000 units. If the production budget calls for Purity to produce 1,300,000 four-gallon containers during 2010, what is the beginning inventory of four-gallon containers on January 1, 2010?