Question

Pompi, Inc, bottles and distributes mineral water from the company's natural springs in northern Oregon. Pompi markets two products: 12 ounce disposable plastic bottles and 1 gallon reusable plastic containers.

1. For 2018 pompi marketing managers project monthly sales of 430,000 12 ounce bottles and 170,000 1 gallon containers. Average selling prices are estimated at $0.30 per 12 ounce bottle and $1.60 per 1 gallon container. Prepare a revenues budget for Pompi, inc, for the year ending December 31, 2018.

2. Pompi begins 2018 with 890,000 12 ounce bottles in inventory. The vice president of operations requests that 1w ounce bottles ending inventory on December 31, 2018 be no less than 640,000 bottles. Based on sales projections as budgeted previously, what is the minimum number of 12 ounce bottles Pompi must produce during 2018?

3m The VP of operations requests that the ending inventory of 1 gallon containers on December 31, 2018 be 230,000 units. If the production budget calls for Pompi to produce 1,600,000 1 gallon containers during 2018, what is the beginning inventory of 1 gallon containers on January 1, 2018?

Answer 1

1.

	12 ounce bottles	1 gallon containers
Sales in units	5,160,000 (430,000*12)	2,040,000 (170,000*12)
Selling price per unit	$0.30	$1.60
Sales revenue	$1,548,000	$3,264,000

2.

	12 ounce bottles
Ending inventory	640,000
Sales in units	5,160,000
Beginning inventory	(890,000)
Production units	4,910,000

3.

	1 gallon containers
Ending inventory	230,000
Sales in units	2,040,000
Production in units	(1,600,000)
Beginning inventory	670,000