Three grams of musk oil are required for each bottle of Mink Caress, a very popular perfume made by a small company in western Siberia. The cost of the musk oil is $2.10 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3:

	Year 2					Year 3
	First	Second	Third	Fourth		First
Budgeted production, in bottles	70,000	100,000	160,000	110,000		80,000

Musk oil has become so popular as a perfume ingredient that it has become necessary to carry large inventories as a precaution against stock-outs. For this reason, the inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter’s production needs. Some 42,000 grams of musk oil will be on hand to start the first quarter of Year 2.

Required:

Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2.

 

Transcribed Image Text:

Check decimal places.) Mink Caress Direct Materials Budget - Year 2 Quarter First Second Third Fourth Year 70,000 100,000 3 Required production in units of finished goods 160,000 110,000 440,000 Units of raw materials needed per unit of finished goods 3 3 3 3 Units of raw materials needed to meet production 210,000 300,000 480,000 330,000 1,320,000 Add: Desired units of ending raw materials inventory Total units of raw materials needed .............. .................. ............. Less: Units of beginning raw materials inventory E............................... ................ Units of raw materials to be purchased Unit cost of raw materials 2.10 24 2.10 $ 2.10 $ 2.10 $ 2.10 Cost of raw materials to purchased Check decimal places.) Mink Caress Direct Materials Budget - Year 2 Quarter First Second Third Fourth Year 70,000 100,000 3 Required production in units of finished goods 160,000 110,000 440,000 Units of raw materials needed per unit of finished goods 3 3 3 3 Units of raw materials needed to meet production 210,000 300,000 480,000 330,000 1,320,000 Add: Desired units of ending raw materials inventory Total units of raw materials needed .............. .................. ............. Less: Units of beginning raw materials inventory E............................... ................ Units of raw materials to be purchased Unit cost of raw materials 2.10 24 2.10 $ 2.10 $ 2.10 $ 2.10 Cost of raw materials to purchased

Answer rating: 100% (QA)

RAW MATERIAL PURCHASE BUDGET Q1 Q2 Q3 Q4 Year Q1 Bud... View the full answer