$3$

Exercise $8-3($Algo$)$ Direct Materials Budget $[$LO$8-4]$

$1\mathrm{.}87$

points

References

Two grams of musk oil are required for each bottle of Mink Caress, a popular perfume made by a company in western Siberia. The cost of the musk oil is $\backslash (\backslash$$ $2\mathrm{.}20\backslash )$ per gram. Budgeted quarterly production of Mink Caress is given below for Year $2$ and the first quarter of Year $3$:

$\backslash$begin$\{$tabular$\}\{$lccccc$\}$

& $\backslash$multicolumn$\{4\}\{$c$\}\{$ Year $2\}$ & Year $3\backslash \backslash$

$\backslash$cline $\{2-6\}$ Budgeted production, in bottles & First & Second & Third & Fourth & First $\backslash \backslash$

& $86,000$ & $116,000$ & $176,000$ & $126,000$ & $96,000$

$\backslash$end$\{$tabular$\}$

The inventory of musk oil at the end of a quarter must equal $20\backslash \%$ of the following quarter's production needs. A total of $34,400$ 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 $2.$

$\backslash$begin$\{$tabular$\}\{|$c$|$c$|$c$|$c$|$c$|$c$|\}$

$\backslash$hline $\backslash$multicolumn$\{6\}\{|$c$|\}\{$Mink Caress$\}\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{6\}\{|$c$|\}\{$Direct Materials Budget $-$ Year $2\}\backslash \backslash$

$\backslash$hline & $\backslash$multicolumn$\{4\}\{|$c$|\}\{$Quarter$\}$ & $\backslash$multirow$[$b$]\{2\}\{*\}\{$Year$\}\backslash \backslash$

$\backslash$hline & First & Second & Third & Fourth & $\backslash \backslash$

$\backslash$hline $>$ & & & & & $\backslash \backslash$

$\backslash$hline Units of raw materials needed per unit of finished goods & & & & & $\backslash \backslash$

$\backslash$hline Units of raw materials needed to meet production & & & & & $\backslash \backslash$

$\backslash$hline $>$ & & & & & $\backslash \backslash$

$\backslash$hline Total units of raw materials needed & & & & & $\backslash \backslash$

$\backslash$hline $\backslash (>\backslash )$ & & & & & $\backslash \backslash$

$\backslash$hline Units of raw materials to be purchased & & & & & $\backslash \backslash$

$\backslash$hline Unit cost of raw materials & & & & & $\backslash \backslash$

$\backslash$hline Cost of raw materials to purchased & & & & & $\backslash \backslash$

$\backslash$hline

$\backslash$end$\{$tabular$\}$