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:     Year 2   Year 3     First Second Third Fourth   First   Budgeted production, in bottles 72,000 102,000 162,000 112,000   82,000       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 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. (Round "Unit cost of raw materials" answers to 2 decimal places.) Mink Caress Direct Materials Budget - Year 2   Quarter     First Second Third Fourth Year Required production in units of finished            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            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               *Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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:

 

  Year 2   Year 3  
  First Second Third Fourth   First  
Budgeted production, in bottles 72,000 102,000 162,000 112,000   82,000  
 

 

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 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. (Round "Unit cost of raw materials" answers to 2 decimal places.)

Mink Caress
Direct Materials Budget - Year 2
  Quarter  
  First Second Third Fourth Year
Required production in units of finished           
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           
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          
 
 

*Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted.

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