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Exercise 8-3 (Algo) Direct Materials Budget [LO8-4] Four grams of musk oll are required for each bottle of Mink Caress, a very popular perfume
Exercise 8-3 (Algo) Direct Materials Budget [LO8-4] Four grams of musk oll 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 $1.70 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3: Budgeted production, in bottles Year 2 Year 3 First 92,000 Becond Third 122,000 182,000 Fourth 132,000 First 102,000 The inventory of musk oll at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 73,600 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. Mink Carees Direct Materials Budget-Year 2 First Quarter 92,000 122,000 Second Quarter Third Quarter Fourth Quarter 182,000 132,000 Year 102,000 Units of raw materials needed per unit of finished goods Units of raw materials needed to meet production Total units of raw materials needed Units of raw materials to be purchased Unit cost of raw materials Cost of raw materials to purchased
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