Revenues and production budget. 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?
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