EXERCISE 8-3 Direct Materials Budget LO8-4 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 S1.50 per gram. Budgeted pro- duction 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 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 36,000 grams of musk oil will be on hand to start the first quarter of Year 2. 393 Master Budgeting Required: Using Schedule 3 as your guide, prepare a direct materials budget for musk oil, by quarter and in total, for Year 2. HOI Chapter 4 NU LO RCSE 4A- 04-6, LO4-7, LO4-S 9 Equivalent Units; Equivalent Units of Production; Assigning Costs-FIFO Method Jarvene Corporation uses the FIFO method in its process costing system. The following data are recent month of operations in one of the company's processing departments 400 3,000 300 Units in beginning inventory . .. Units started into production. . . Units in ending inventory Units transferred to the next department...3,100 Materials Conversion 40% 60% Percentage completion of beginning inventory Percentage completion of ending inventory 80% 70% i. The cost of beginning inventory according to the company's costing system was $11,040 of which $8,120 was for materials and the remainder was for conversion cost. The costs added during the month amounted to $132,730. The costs per equivalent unit for the month were: Materials Conversion $25.40 $18.20 Cost per equivalent unit Compute the total cost per equivalent unit for the month. Compute the equivalent units of material and conversion that were required to complete the Required 2. Compute the equivalent units of material and conversion in the ending inventory. 4. Compute the number of units started and completed during the month. C/I- beginning inventory 5. Compute the cost of ending work in process inventory for materials, conversion, and in total for the month. Compute the cost of the units transferred to the next department for materials, conversion, and in total for the month. 6