Exercise 8-3 (Algo) 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 $2.20 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3: First 72,000 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 Year 2 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 Second Third Fourth 102,000 162,000 112,000 Budgeted production, in bottles The inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 43,200 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 3 First 82,000 Mink Caress Direct Materials Budget - Year 2 First Quarter Second Quarter Third Quarter Fourth Quarter 72,000 102,000 112,000 2 162,000 2 324,000 2 204,000 224,000 21 144,000 Year 82,000 164,000
Exercise 8-3 (Algo) 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 $2.20 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3: First 72,000 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 Year 2 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 Second Third Fourth 102,000 162,000 112,000 Budgeted production, in bottles The inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 43,200 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 3 First 82,000 Mink Caress Direct Materials Budget - Year 2 First Quarter Second Quarter Third Quarter Fourth Quarter 72,000 102,000 112,000 2 162,000 2 324,000 2 204,000 224,000 21 144,000 Year 82,000 164,000
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![Exercise 8-3 (Algo) 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 $2.20 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for
the first quarter of Year 3:
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
First
72,000
Less Units of beginning raw materials inventory
Units raw materials to be purchased
Year 2
Second
Third
102,000 162,000
Budgeted production, in bottles
The inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 43,200
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.
Unit cost of raw materials
Cost of raw materials to purchased
Fourth
112,000
Mink Caress
Direct Materials Budget - Year 2
First Quarter Second Quarter
72,000
102,000
2
2
144,000
Year 3
First
82,000
204,000
Third Quarter Fourth Quarter
162,000
112,000
2
2
324,000
224,000
Year
82,000
2
164,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F48daf3b6-4039-44ea-9ed6-c1364bbb5763%2F854babf7-2ff4-41af-81c7-79bcc4b44afa%2F8axn8m1_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 8-3 (Algo) 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 $2.20 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for
the first quarter of Year 3:
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
First
72,000
Less Units of beginning raw materials inventory
Units raw materials to be purchased
Year 2
Second
Third
102,000 162,000
Budgeted production, in bottles
The inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 43,200
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.
Unit cost of raw materials
Cost of raw materials to purchased
Fourth
112,000
Mink Caress
Direct Materials Budget - Year 2
First Quarter Second Quarter
72,000
102,000
2
2
144,000
Year 3
First
82,000
204,000
Third Quarter Fourth Quarter
162,000
112,000
2
2
324,000
224,000
Year
82,000
2
164,000
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