Three grams of musk oil are required for each bottle of Mink Caress, a very popu
ID: 2453932 • 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 $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:
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 38,400 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.)
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 $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:
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 $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: Year 3 First 74,000 Year 2 First Second Third Fourth Budgeted production, in bottles 64,000 94,000 154,000 104,000 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 38,400 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·(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 purchasedExplanation / Answer
Particulars
Quarter-1
Quarter-2
Quarter-3
Quarter-4
Total
Budgeted Production in Raw Materials (grams)
64000*3
= 192,000
94000*3
= 282,000
154000*3
= 462,000
104000*3
= 312,000
12,48,000
Add:-Closing Stock
20% of 282,000
= 56,400
20% of 462,000
= 92,400
20% of 312,000
= 62,400
20% of [74000*3]
= 44,400
44,400
Less:-Opening Stock
38,400
56,400
92,400
62,400
38,400
Raw-Materials to be Purchased(grams)
210,000
318,000
432,000
294,000
12,54,000
Raw material cost to be purchased
210000*1.70
=$357,000
$540,600
$734,400
$499,800
$2131,800
Particulars
Quarter-1
Quarter-2
Quarter-3
Quarter-4
Total
Budgeted Production in Raw Materials (grams)
64000*3
= 192,000
94000*3
= 282,000
154000*3
= 462,000
104000*3
= 312,000
12,48,000
Add:-Closing Stock
20% of 282,000
= 56,400
20% of 462,000
= 92,400
20% of 312,000
= 62,400
20% of [74000*3]
= 44,400
44,400
Less:-Opening Stock
38,400
56,400
92,400
62,400
38,400
Raw-Materials to be Purchased(grams)
210,000
318,000
432,000
294,000
12,54,000
Raw material cost to be purchased
210000*1.70
=$357,000
$540,600
$734,400
$499,800
$2131,800