Edt Viewrlstory er 08 Homework Which Produces And Sells A 08 Homework Saved Help

Question

Edt Viewrlstory er 08 Homework Which Produces And Sells A 08 Homework Saved Help Sa Exercise 8-3 Direct Materials Budget [LO8-4) Four 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 $1.70 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3: 113.09 PirstSecond Third Fourth 92,000 122,000 182,000 132,000 First Budgeted produetion, in bottles 102,000 ook 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 73,600 grams of musk oil will be on hand to start the first quarter of Year 2 int rences Required Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2. (Round "Unit cost of raw materials" answers to 2 decimal places.)

Explanation / Answer

RAW MATERIAL PURCHASE BUDGET Q1 Q2 Q3 Q4 Year Q1 Budgeted Productionunits 92,000 122,000 182,000 132,000 528,000 102,000 Raw material required per unit 4 4 4 4 4 4 Total raw material required 368,000 488,000 728,000 528,000 2,112,000 408,000 Add: Desired Ending Inventory 97,600 145,600 105,600 81,600 81,600 Total needs 465,600 633,600 833,600 609,600 2,193,600 Less: Beginning Inventory 73,600 97,600 145,600 105,600 73,600 Purchase Units 392,000 536,000 688,000 504,000 2,120,000 Cost price per unit 1.70 1.70 1.70 1.70 1.70 Budgeted Purchase in $ 666,400 911,200 1,169,600 856,800 3,604,000

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