Sales in Units May June. 50,000 75,000 90,000 80,000 July The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-month inventory levels must equal 10% of the following month's sales. The inventory at the end of March was 5,000 units. Required: Prepare a production budget for the second quarter; in your budget, show the number of units to be produced each month and for the quarter in total. EXERCISE 8-3 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 $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 60,000 90,000 150,000 100,000 70,000 Budgeted production, in bottles ... . . 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 36,000 grams of musk oil will be on hand to start the first quarter of Year 2. Musk oil has become so popular as a perfume ingredient that it has become necessary to carry Required: Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2. At the bottom of your budget, show the amount of purchases for each quarter and for the year in total.
Sales in Units May June. 50,000 75,000 90,000 80,000 July The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-month inventory levels must equal 10% of the following month's sales. The inventory at the end of March was 5,000 units. Required: Prepare a production budget for the second quarter; in your budget, show the number of units to be produced each month and for the quarter in total. EXERCISE 8-3 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 $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 60,000 90,000 150,000 100,000 70,000 Budgeted production, in bottles ... . . 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 36,000 grams of musk oil will be on hand to start the first quarter of Year 2. Musk oil has become so popular as a perfume ingredient that it has become necessary to carry Required: Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2. At the bottom of your budget, show the amount of purchases for each quarter and for the year in total.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
8-3
![Sales in Units
May
June.
50,000
75,000
90,000
80,000
July
The company is now in the process of preparing a production budget for the second quarter. Past
experience has shown that end-of-month inventory levels must equal 10% of the following month's
sales. The inventory at the end of March was 5,000 units.
Required:
Prepare a production budget for the second quarter; in your budget, show the number of units to be
produced each month and for the quarter in total.
EXERCISE 8-3 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 $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
60,000
90,000
150,000
100,000
70,000
Budgeted production, in bottles ... . .
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 36,000
grams of musk oil will be on hand to start the first quarter of Year 2.
Musk oil has become so popular as a perfume ingredient that it has become necessary to carry
Required:
Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2. At the bottom of
your budget, show the amount of purchases for each quarter and for the year in total.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F85e39e9b-3b6a-4fb6-8406-b63a567ff03b%2Ffbc048ef-4f2a-4434-823b-fe156ca5bb41%2F0og5qco.jpeg&w=3840&q=75)
Transcribed Image Text:Sales in Units
May
June.
50,000
75,000
90,000
80,000
July
The company is now in the process of preparing a production budget for the second quarter. Past
experience has shown that end-of-month inventory levels must equal 10% of the following month's
sales. The inventory at the end of March was 5,000 units.
Required:
Prepare a production budget for the second quarter; in your budget, show the number of units to be
produced each month and for the quarter in total.
EXERCISE 8-3 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 $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
60,000
90,000
150,000
100,000
70,000
Budgeted production, in bottles ... . .
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 36,000
grams of musk oil will be on hand to start the first quarter of Year 2.
Musk oil has become so popular as a perfume ingredient that it has become necessary to carry
Required:
Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2. At the bottom of
your budget, show the amount of purchases for each quarter and for the year in total.
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