Patrick Inc. makes industrial solvents sold in 5-gallon drum containers. Planned production in units for the first 3 months of the coming year is: January43,800 February41,000 March50,250 Each drum requires 5.5 gallons of chemicals and one plastic drum container. Company policy requires that ending inventories of raw materials for each month be 15% of the next month's production needs. That policy was met for the ending inventory of December in the prior year. The cost of one gallon of chemicals is $2.00. The cost of one drum is $1.60. Required: 1. Calculate the ending inventory of chemicals in gallons for December of the prior year, and for January and February. What is the beginning inventory of chemicals for January

Ending inventory (December)   =  $72,270

Ending inventory (January)  =  $67,650

Ending inventory (February)   =  $82,912.50

Beginning Inventory (January ) = $72,270

Explanation:

The ending inventory of chemicals in gallons :

Note : Based on Company policy, this was determined as 15% of next month's production needs.

Ending inventory (December)  = 43,800 × 15% × 5.5 gallons × $2.00

                                                   =  $72,270

Ending inventory (January)  = 41,000 × 15% × 5.5 gallons × $2.00

                                                   =  $67,650

Ending inventory (February)  = 50,250 × 15% × 5.5 gallons × $2.00

                                                   =  $82,912.50

The beginning inventory of chemicals for January is equal to the Ending inventory for December that is $72,270

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