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 $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 74,000 104,000 164,000 114,000 84,000 The inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 29,600 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.
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 $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 74,000 104,000 164,000 114,000 84,000 The inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 29,600 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text: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 $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
74,000 104,000 164,000 114,000 84,000 The inventory of musk oil at the end of a quarter
must be equal to 20% of the following quarter's production needs. Some 29,600 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.
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