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Four grams of musk oil are required for each bottle of Mink Caress, a very popular perfume made by a small company in western Siberia.
Four 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 $1.80 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 94,000 124,000 184,000 134,000 104,000 The Inventory of musk oll at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 75,200 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. Year Fourth Third 184,000 4 134,000 536,000 4 4 4 Mink Caress Direct Materials Budget - Year 2 Quster First Second Required production in units of finished goods 94,000 124,000 Units of raw materials needed per unit of finished goods 4 Units of raw materials needed to meet production 376,000 496,000 Add: Desired units of ending raw materials inventory 99,200 147,200 Total units of raw materials needed Less: Units of beginning raw materials inventory Units of raw materials to be purchased Unit cost of raw materials $ 1.80 $ 1.80 $ Cost of raw materials to purchased 536,000 736,000 107,200 2.144,000 1.80 $ 1.80 $ 1.80
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