Two grams of musk oil are required for each bottle of Mink Caress, a very popula
ID: 2420320 • Letter: T
Question
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 $1.80 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
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 32,000 grams of musk oil will be on hand to start the first quarter of Year 2.
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.)
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 $1.80 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3.
Mink Caress Direct Materials Budget - Year 2 Quarter First Second Third Fourth Year 80,000 Required production in units of finished goods Units of raw materials needed per unit of finished goods Units of raw materials needed to meet production Add: Desired units of ending raw materials inventory Total units of raw materials needed Less: Units of beginning raw materials inventory Units of raw materials to be purchased Unit cost of raw materials Cost of raw materials to purchased 110,000 170,000 120,000 480,000 1.80 1.80 $ 1.80 $ 1.80 $ 1.80Explanation / Answer
Answer:
Mink Caress Direct Materials Budget-Year 2 Quarter First Second Third Fourth Year Required production in units of finished goods 80000 110000 170000 120000 480000 Units of raw materials needed per unit of finished goods 2 2 2 2 2 Units of raw materials needed to meet production 160000 220000 340000 240000 960000 Add: Desired units of ending raw materials inventory 44000 68000 48000 36000 196000 Total units of raw materials needed 204000 288000 388000 276000 1156000 Less: Units of beginning raw materials inventory 32000 44000 68000 48000 192000 Units of raw materials to be purchased 172000 244000 320000 228000 964000 Unit cost of raw materials $1.80 $1.80 $1.80 $1.80 $1.80 Cost of raw materials to purchased $309,600.00 $439,200.00 $576,000.00 $410,400.00 $1,735,200.00Related Questions
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