Three ounces of zinc oxide are required for each bottle of Hawaiian Gold, a suntan lotion made in Orange, California. The zinc oxide cost is $2.20 per ounce. Budgeted production of Hawaiian Gold is given below by quarters for Year 2 and for the first quarter of Year Year 2 First Second Third Fourth 72,000 102,000 162,000 112,000 Year 3 First 82,000 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 43,200 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. Year Fourth 112,000 444,800 4 Hawaiian Gold Direct Materials Budget - Year 2 Quarter First Second Third 72,000 10,200 162,000 Units of raw materials needed per unit of finished goods 4 4 Units of raw materials needed to meet production 288,000 40,800 648,000 Add: Desired units of ending raw materials inventory 81,600 129,600 89,600 Total units of raw materials needed 369,600 537,600 737,600 43,200 81,600 129,600 Units of raw materials to be purchased 326,400 456,000 608,000 Unit cost of raw materials 2.20 $ 2.20 $ 2.20 $ Cost of raw materials to purchased $ 718,080 $ 1,003,200 $ 1,337,600 $ 448,000 1,779,200 65,600 65,600 513,600 1,857,600 89,600 43,200 424,000 1,814,400 2.20 $ 2.20 932,800 $ 3,991,680