Two 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 Fourth First First 86,000 Second 116,000 Third 176,000 Budgeted production, in bottles 126,000 96,000 The inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 34,400 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 First Quarter Second Quarter Third Quarter Fourth Quarter Year 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
Two 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 Fourth First First 86,000 Second 116,000 Third 176,000 Budgeted production, in bottles 126,000 96,000 The inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 34,400 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 First Quarter Second Quarter Third Quarter Fourth Quarter Year 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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Two 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 |
86,000 |
116,000 |
176,000 |
126,000 |
96,000 |
The inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter’s production needs. Some 34,400 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:### Direct Materials Budget for Mink Caress Perfume
#### Overview
Two 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. The budgeted production of Mink Caress is provided below by quarters for Year 2 and for the first quarter of Year 3:
| Budged Production in Bottles | Year 2 First Quarter | Year 2 Second Quarter | Year 2 Third Quarter | Year 2 Fourth Quarter | Year 3 First Quarter |
|------------------------------|----------------------|-----------------------|----------------------|----------------------|---------------------|
| | 86,000 | 116,000 | 176,000 | 126,000 | 96,000 |
#### Inventory Requirements
The inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 34,400 grams of musk oil will be on hand at the start of the first quarter of Year 2.
#### Task
Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2.
#### Direct Materials Budget - Year 2
To assist in preparation, here is a partially completed Direct Materials Budget for Year 2 in tabular form:
| Mink Caress | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Year |
|-------------------------------------------|---------------|----------------|---------------|----------------|--------|
| **Direct Materials Budget - Year 2** | | | | | |
| 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 be purchased** | | | | | |
#### Explanation of Required Data:
1. **Units of raw materials needed per unit of finished goods:** This will be two grams per bottle (as each bottle of perfume requires two grams
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