The budget components for birk company for the quarter ended june 30 appear below. birk sells trash cans for $12 each. budgeted production for the next three months is: april 26,000 units may 46,000 units june 29,000 units birk desires to have trash cans on hand at the end of each month equal to 20 percent of the following month’s budgeted sales in units. on march 31, birk had 4,000 completed units on hand. five pounds of plastic are required for each trash can. at the end of each month, birk desires to have 10 percent of the following month’s production material needs on hand. at march 31, birk had 13,000 pounds of plastic on hand. the materials used in production costs $0.60 per pound. each trash can produced requires 0.10 hours of direct labor. compute the cost of the plastic inventory at the end of may.

Ardmore farm and seed has an inventory dilemma. they have been selling a brand of very popular insect spray for the past year. they have never really analyzed the costs incurred from ordering and holding the inventory and currently fave a large stock of the insecticide in the warehouse. they estimate that it costs $25 to place an order, and it costs $0.25 per gallon to hold the spray. the annual requirements total 80,000 gallons for a 365 day year.a. assuming that 10,000 gallons are ordered each time an order is placed, estimate the annual inventory costs.b. calculate the eoq.c. given the eoq calculated in part b., how many orders should be placed and what is the average inventory balance? d. if it takes seven days to receive an order from suppliers, at what inventory level should ardmore place another order?