Year 400,000 3 Mink Caress Direct Materials Budget - Year 2 Quarter First Second Third Required production in units of finished goods 60,000 90,000 150,000 Units of raw materials needed per unit of finished goods 3 3 3 Units of raw materials needed to meet production 180,000 270,000 450,000 Add: Desired units of ending raw materials inventory 54,000 90,000 60,000 Total units of raw materials needed 234,000 360,000 510,000 Less: Units of beginning raw materials inventory (36,000) (54,000) (90,000) Units of raw materials to be purchased 198,000 306,000 420,000 Unit cost of raw materials S 150.00 $ 150.00 XS 150.00 S Cost of raw materials to purchased 29,700,000 45,900,000 63,000,000 Fourth 100,000 3 300,000 42,000 342,000 (60,000) 282,000 1,200,000 42,000 1,242,000 (36,000) 1,206,000 S S Check my work 1 Exercise 8-3 (Static) 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 $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: 20 points Skipped Year 2 Second Third Fourth 90,000 150,000 100,000 First 60,000 Year 3 First 70,000 Budgeted production, in bottles eBook 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. Required: Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2. Print References Mink Caress Direct Materials Budget - Year 2 Quarter First Second Third Fourth Year Units of raw materials needed per unit of finished goods Units of raw materials needed to meet production Total units of raw materials needed Units of raw materials to be purchased Unit cost of raw materials Cost of raw materials to purchased Answer is complete but not entirely correct. Mink Caress Direct Materials Budget - Year 2 Quarter First Second Third Fourth Year Required production in units of finished goods 60,000 90,000 150,000 100,000 400,000 Units of raw materials needed per unit of finished goods 3 3 3 3 3 Units of raw materials needed to meet production 180,000 270,000 450,000 300,000 1,200,000 Add: Desired units of ending raw materials inventory 54,000 90,000 60,000 42,000 42,000 Total units of raw materials needed 234.000 360,000 510,000 342,000 1,242,000 Less: Units of beginning raw materials inventory (36,000) (54,000) (90,000) (60,000) (36,000) Units of raw materials to be purchased 198,000 306,000 420,000 282,000 1,206,000 Unit cost of raw materials S 150.00 Xs 150.00 S 150.00 S 150.00 X s 150.00 X S S Cost of raw materials to purchased S S S 29,700,000 45,900,000 63,000,000 42,300,000 180,900,000
