Four ounces of zinc oxide are required for each bottle of Hawaiian Gold, a suntan lotion made in Orange, California. The zinc oxide cost is $170 per ounce Budgeted production of Hawaiian Gold is given below by quarters for Year 2 and for the first quarter of Year 3: Year 2 First Second Third 92,600 122,000 182,000 Fourth 132.000 Year 3 First 102,00 Budgeted production, in bottles There is a high demand for zinc oxide which requires the company to have large inventories of the ingredient in case of a shortage. For this reason, the zinc oxide inventory at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 73,600 Ounces of zinc oxide will be on hand to start the first quarter of Year 2 Required: Prepare a direct materials budget for zinc oxide, by quarter and in total, for Year 2 Fourth 132,000 3 Hawaiian Gold Direct Materials Budget - Year 2 Quarter First Second (Required production in units of finished goods 92.000 122,000 Units of raw materials needed per unit of finished goods 31 3 Units of raw materials needed to meet production 276,000 366,000 Add: Desired units of ending raw materials inventory 73,200 109,200 Total units of raw materials needed 349,200 475,200 Less: Units of beginning raw materials inventory 73.600 Units of raw materials to be purchased Unit cost of raw materials $ 1.700 $ 1.705 Cost of raw materials to purchased Third 182,000 3 546,000 79,200 625.200 Year 102,000 3 306,000 61.200 367,200 396,000 61,200 457,200 1.70's 1.70 s 1.70