Three grams of musk oil are required for each bottle of Mink Caress, a very popu
ID: 2513376 • 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: Budgeted production, in bottles 64, 000 94,000 154,000 104,000 74,000 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 quarters 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.) Direct Materials Budget Year 2 Third First Units of raw materials needed ner unit of finisherd anndsExplanation / Answer
Mink Caress Direct Materials Budget - Year 2 Quarter First Second Third Fourth Year Budgeted production, in bottles 64000 94000 154000 104000 416000 Units of raw materials needed per unit of finished goods 3 3 3 3 3 Units of raw materials needed to meet production (grams) 192000 282000 462000 312000 1248000 Add desired ending inventory of raw materials 56400 92400 62400 44400 44400 Total units of raw materials needed 248400 374400 524400 356400 1292400 Less beginning inventory of raw materials 38400 56400 92400 62400 38400 Units of raw materials to be purchases 210000 318000 432000 294000 1254000 Unit cost of raw materials $ 1.70 1.70 1.70 1.70 1.70 Cost of raw materials to purchase $ 357000 540600 734400 499800 2131800