Four 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: Year 2 Year 3 First Second Third Fourth First Budgeted production, in bottles 96,000 126,000 186,000 136,000 106,000 The inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter’s production needs. Some 76,800 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.
Four 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: Year 2 Year 3 First Second Third Fourth First Budgeted production, in bottles 96,000 126,000 186,000 136,000 106,000 The inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter’s production needs. Some 76,800 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Four 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:
| Year 2 | Year 3 | ||||
|---|---|---|---|---|---|
| First | Second | Third | Fourth | First | |
| Budgeted production, in bottles | 96,000 | 126,000 | 186,000 | 136,000 | 106,000 |
The inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter’s production needs. Some 76,800 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.
Transcribed Image Text: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
Mink Caress
Direct Materials Budget - Year 2
First
Second
Quarter
Third
Fourth
Year
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