Four grams of musk oil are required for each bottle of Mink Caress, a very popul

Question

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 $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 First Second Third Fourth 100,000 130,000 190,000 140,000 Year 3 First 110,000 Budgeted production, in bottles 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 80,000 grams of musk oil will be on hand to start the first quarter of Year2 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.) Mink Caress Direct Materials Budget - Year 2 Quarter First Second Third Fourth Year 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 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 / Answer

Solution:

Mink Caress Direct materials budget - year 2 Particulars Quarter Year First Second Third Fourth Required production in units for finished goods 100000 130000 190000 140000 560000 Units of raw material needed per unit of finished goods 4 4 4 4 4 Units of raw material needed for production 400000 520000 760000 560000 2240000 Add: Desired ending inventory of raw material (20% of following quarter production needs) 104000 152000 112000 88000 88000 Total unit of raw material needed 504000 672000 872000 648000 2328000 Less: Beginning inventory of raw material 80000 104000 152000 112000 80000 Units of raw materials to be purchased 424000 568000 720000 536000 2248000 Unit cost of raw materials $2.20 $2.20 $2.20 $2.20 $2.20 Cost of raw materials to be purchased $932,800.00 $1,249,600.00 $1,584,000.00 $1,179,200.00 $4,945,600.00

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.