Exercise 8-3 (Algo) Direct Materials Budget [LO8-4] Two 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 $1.90 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3: Units of raw materials needed per unit of finished goods Units of raw materials needed to meet production First 82,000 Total units of raw materials needed Second 112,000 Units of raw materials to be purchased Unit cost of raw materials Cost of raw materials to purchased Year 2 Required: Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2. 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 32,800 grams of musk oil will be on hand to start the first quarter of Year 2. Third 172,000 Mink Caress Direct Materials Budget - Year 2 First Fourth 122,000 Second Quarter Year 3 First 92,000 Third Fourth Year
Exercise 8-3 (Algo) Direct Materials Budget [LO8-4] Two 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 $1.90 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3: Units of raw materials needed per unit of finished goods Units of raw materials needed to meet production First 82,000 Total units of raw materials needed Second 112,000 Units of raw materials to be purchased Unit cost of raw materials Cost of raw materials to purchased Year 2 Required: Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2. 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 32,800 grams of musk oil will be on hand to start the first quarter of Year 2. Third 172,000 Mink Caress Direct Materials Budget - Year 2 First Fourth 122,000 Second Quarter Year 3 First 92,000 Third Fourth Year
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
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A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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![Exercise 8-3 (Algo) Direct Materials Budget [LO8-4]
Two 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 $1.90 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for
the first quarter of Year 3:
Units of raw materials needed per unit of finished goods
Units of raw materials needed to meet production
First
82,000
Total units of raw materials needed
Second
112,000
Units of raw materials to be purchased
Unit cost of raw materials
Cost of raw materials to purchased
Year 2
Required:
Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2.
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 32,800
grams of musk oil will be on hand to start the first quarter of Year 2.
Third
172,000
Mink Caress
Direct Materials Budget - Year 2
First
Fourth
122,000
Second
Quarter
Year 3
First
92,000
Third
Fourth
Year](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff8bc4f6a-99bf-411e-9b9f-cf84a2eda9c4%2F05ba6a82-4427-4350-b20a-9d3d81767b43%2F4gyggrg_processed.png&w=3840&q=75)
Transcribed Image Text:Exercise 8-3 (Algo) Direct Materials Budget [LO8-4]
Two 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 $1.90 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for
the first quarter of Year 3:
Units of raw materials needed per unit of finished goods
Units of raw materials needed to meet production
First
82,000
Total units of raw materials needed
Second
112,000
Units of raw materials to be purchased
Unit cost of raw materials
Cost of raw materials to purchased
Year 2
Required:
Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2.
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 32,800
grams of musk oil will be on hand to start the first quarter of Year 2.
Third
172,000
Mink Caress
Direct Materials Budget - Year 2
First
Fourth
122,000
Second
Quarter
Year 3
First
92,000
Third
Fourth
Year
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