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Three grams of musk oil are required for each bottle of Mink Caress, a very popular perfume made by a small company in western
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 $1.50 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 First Second Third Fourth 60,000 90,000 150,000 100,000 70,000 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. Required: Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2. Required production in units of finished goods Units of raw materials needed per unit of finished goods Units of raw materials needed to meet production Add: Desired units of ending raw materials inventory 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 Cost of raw materials to purchased. Mink Caress 60,000 Direct Materials Budget Year 2 First Quarter Second Quarter 90,000 150,000 Third Quarter Fourth Quarter 100,000 3 3 3 180,000 270,000 450,000 300,000 $ 1.50 $ 1.50 $ 1.50 $ 1.50 Year
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