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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 $1.90 PER GRAM. THE BUDGETED PRODUCTION OF MINK CARESS IS GIVEN BELOW BY QUARTERS FOR YEAR 2 AND FOR THE FIRST QUARTER OF YEAR 3: Year 2 First Year 3 Secon Third Fourth First Budgeted production, in 68,000 98,000 1,58,000 1,08,000 78,000 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 40,800 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. WAYLAND MANUFACTURING USES A NORMAL COST SYSTEM AND HAD THE FOLLOWING DATA AVAILABLE FOR 2010: Direct materials purchased on account $1,48,000 Direct materials requisitioned Direct labor cost incurred Factory overhead incurred Cost of goods completed 82,000 1,30,000 1,46,000 2,92,000 Cost of goods sold 2,56,000 Beginning direct materials inventory 26,000 Beginning WIP inventory 64,000 Beginning finished goods inventory 58,000 Overhead application rate, as a percent of direct-labor 125% THE ENDING BALANCE OF THE DIRECT MATERIALS INVENTORY IS: A. $82,000 B. $108,000 c. $174,000 D. $92,000 E. NONE OF THE ABOVE

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 $1.90 PER GRAM. THE BUDGETED PRODUCTION OF MINK CARESS IS GIVEN BELOW BY QUARTERS FOR YEAR 2 AND FOR THE FIRST QUARTER OF YEAR 3: Year 2 First Year 3 Secon Third Fourth First Budgeted production, in 68,000 98,000 1,58,000 1,08,000 78,000 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 40,800 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. WAYLAND MANUFACTURING USES A NORMAL COST SYSTEM AND HAD THE FOLLOWING DATA AVAILABLE FOR 2010: Direct materials purchased on account $1,48,000 Direct materials requisitioned Direct labor cost incurred Factory overhead incurred Cost of goods completed 82,000 1,30,000 1,46,000 2,92,000 Cost of goods sold 2,56,000 Beginning direct materials inventory 26,000 Beginning WIP inventory 64,000 Beginning finished goods inventory 58,000 Overhead application rate, as a percent of direct-labor 125% THE ENDING BALANCE OF THE DIRECT MATERIALS INVENTORY IS: A. $82,000 B. $108,000 c. $174,000 D. $92,000 E. NONE OF THE ABOVE

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter8: Budgeting For Planning And Control
Section: Chapter Questions
Problem 17E: Crescent Company produces stuffed toy animals; one of these is Arabeau the Cow. Each Arabeau takes...
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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 $1.90 PER GRAM. THE BUDGETED PRODUCTION OF MINK CARESS IS GIVEN BELOW BY QUARTERS FOR YEAR 2 AND FOR THE FIRST QUARTER OF YEAR 3: Year 2 First Year 3 Secon Third Fourth First Budgeted production, in 68,000 98,000 1,58,000 1,08,000 78,000 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 40,800 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. WAYLAND MANUFACTURING USES A NORMAL COST SYSTEM AND HAD THE FOLLOWING DATA AVAILABLE FOR 2010: Direct materials purchased on account $1,48,000 Direct materials requisitioned Direct labor cost incurred Factory overhead incurred Cost of goods completed 82,000 1,30,000 1,46,000 2,92,000 Cost of goods sold 2,56,000 Beginning direct materials inventory 26,000 Beginning WIP inventory 64,000 Beginning finished goods inventory 58,000 Overhead application rate, as a percent of direct-labor 125% THE ENDING BALANCE OF THE DIRECT MATERIALS INVENTORY IS: A. $82,000 B. $108,000 c. $174,000 D. $92,000 E. NONE OF THE ABOVE
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 $1.90 PER GRAM. THE BUDGETED PRODUCTION OF MINK CARESS IS GIVEN BELOW BY QUARTERS FOR YEAR 2 AND FOR THE FIRST QUARTER OF YEAR 3: Year 2 First Year 3 Secon Third Fourth First Budgeted production, in 68,000 98,000 1,58,000 1,08,000 78,000 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 40,800 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. WAYLAND MANUFACTURING USES A NORMAL COST SYSTEM AND HAD THE FOLLOWING DATA AVAILABLE FOR 2010: Direct materials purchased on account $1,48,000 Direct materials requisitioned Direct labor cost incurred Factory overhead incurred Cost of goods completed 82,000 1,30,000 1,46,000 2,92,000 Cost of goods sold 2,56,000 Beginning direct materials inventory 26,000 Beginning WIP inventory 64,000 Beginning finished goods inventory 58,000 Overhead application rate, as a percent of direct-labor 125% THE ENDING BALANCE OF THE DIRECT MATERIALS INVENTORY IS: A. $82,000 B. $108,000 c. $174,000 D. $92,000 E. NONE OF THE ABOVE
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