Three grams of musk oil are required for each bottle of Mink Caress, a very popu
ID: 2555502 • Letter: T
Question
Three 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
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 43,200 grams of musk oil will be on hand to start the first quarter of Year 2.
Three 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:
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 72,000 3 216,000 448,000 3 1,344,000 102,000 162,000 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 112,000 3 336,000 306,000 486,000 Total units of raw materials needed 216,000 306,000 Units of raw materials to be purchased Unit cost of raw materials Cost of raw materials to purchased 216,000 306,000 2.20 $ 2.20 $ 2.20 $ 2.20 $ 2.20 $475,200 $ 673,200Explanation / Answer
Direct materials budget :
First Second Third Fourth Year Required production in units of finished goods 72000 102000 162000 112000 448000 Units of raw materials needed per unit of finished goods 3 3 3 3 3 Units of raw materials needed to meet production 216000 306000 486000 336000 1344000 Add; Desired ending inventory 61200 97200 67200 49200 49200 Total units of raw materials needed 277200 403200 553200 385200 1393200 Less: Beginning inventory (43200) (61200) (97200) (67200) (43200) Units of raw materials to be purchased 234000 342000 456000 318000 1350000 Unit cost of raw materials 2.20 2.20 2.20 2.20 2.20 Cost of raw materials to purchased 514800 752400 1003200 699600 2970000Related Questions
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