Evaluate the ending inventory of plastic

Reference no: EM139783

Hargrow, Inc. makes and sells a single product, buckets. It takes 30 ounces of plastic to make one bucket. Budgeted production of buckets for the next three months is as follows: August 90,000 buckets, September 75,000 buckets, October 65,000 buckets. The company wants to maintain monthly ending raw material inventories of plastic equal to 10% of the following month's production needs. On August 1st 270,000 ounces of plastic were on hand. The cost of plastic is $0.03 per ounce.

How much ending inventory of plastic should be reported on the company's balance sheet at September 30?
1. $5,850
2. $6,750
3. $7,500
4. $64,350
5. $195,000

Reference no: EM139783

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