required for each bottle of musk oil is $1.50 per gram. Budgeted production of Mink Cares 3: Caress, a very popular pe

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 $1.50 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for
the first quarter of Year 3:
Year 2
Year 3
First
Second
Third
Fourth
First
Budgeted production, in bottles
60,000
90,000 150,000 100,000
70,000
The inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 36,000
grams of musk oil will be on hand to start the first quarter of Year 2.
Required:
Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2.
Mink Caress
Direct Materials Budget - Year 2
Quarter
First
Second
Third
Fourth
Year
Required production in units of finished goods
60,000
90,000
150,000
100,000
400,000
Units of raw materials needed per unit
hed goods
3
3
Units of raw materials needed to meet production
180,000
270,000
450,000
300,000
1,200,000
Add: Desired units of ending raw materials inventory
Total units of raw materials needed
Less: Units of beginning raw materials inventory
54,000
90,000
60,000
42,000
360,000
54,000
510,000
234,000
36,000
342,000
90,000
60,000
Units of raw materials to be purchased
198,000
306,000
420,000
282,000
1,206,000
Unit cost of raw materials
1.50
2$
1.50 $
1.50 $
1.50
2$
1.50
Cost of raw materials to purchased
297,000 $
459,000 S
630,000 $
423,000 $ 1,809,000
Transcribed Image Text: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 $1.50 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3: Year 2 Year 3 First Second Third Fourth First Budgeted production, in bottles 60,000 90,000 150,000 100,000 70,000 The inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 36,000 grams of musk oil will be on hand to start the first quarter of Year 2. Required: Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2. Mink Caress Direct Materials Budget - Year 2 Quarter First Second Third Fourth Year Required production in units of finished goods 60,000 90,000 150,000 100,000 400,000 Units of raw materials needed per unit hed goods 3 3 Units of raw materials needed to meet production 180,000 270,000 450,000 300,000 1,200,000 Add: Desired units of ending raw materials inventory Total units of raw materials needed Less: Units of beginning raw materials inventory 54,000 90,000 60,000 42,000 360,000 54,000 510,000 234,000 36,000 342,000 90,000 60,000 Units of raw materials to be purchased 198,000 306,000 420,000 282,000 1,206,000 Unit cost of raw materials 1.50 2$ 1.50 $ 1.50 $ 1.50 2$ 1.50 Cost of raw materials to purchased 297,000 $ 459,000 S 630,000 $ 423,000 $ 1,809,000
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