Three grams of musk oil are required for each bottle of Mink Caress, a very popu
ID: 2558804 • Letter: T
Question
Three grams of musk oil are required for each bottle of Mink Caress, a very popular perfume small company in westem Siberia. The cost of the musk oil is $1.50 per gram. Budgeted production of Mink first quarter of Year 3: Year 2 First Second Third Fourth 60,000 90,000 150,000 100,000 Year 3 First 70,000 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 quarters production needs. Some 36 000 grams of musk ol will be on hand to start the first quarter of Year 2 Required Prepare a direct materia's budget for musk cil, by quarter and in sotal, 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 fnshed goods Units of raw materials needed per unit of finished goods Unts of raw materials needed to meet production Total units of raw materials needed Units of raw maneials to be purchased Unit cost of raw materials Cost ot raw materia's to be purchasedExplanation / Answer
Direct Materials Budget - Year 2
Quarter
Year 3 Quarter
First
Second
Third
Fourth
Year
1
Required Production in units of finished goods
60000
90000
150000
100000
400000
70000
Units of raw materials needed per unit of finished goods
3
3
3
3
3
3
Units of raw materials needed to meet production
180000
270000
450000
300000
1200000
210000
Add: Desired Ending Raw Material Inventory (20% of next quarter's production need)
54000
90000
60000
42000
42000
Total Units of Raw materials needed
234000
360000
510000
342000
1242000
Less: Beginning Raw material inventory (ending inventory of last month)
36000
54000
90000
60000
36000
Units of Raw materials to be purchased
198000
306000
420000
282000
1206000
Unit Cost of raw materials
$1.50
$1.50
$1.50
$1.50
$1.50
Cost of raw materials to be purchased
$297,000
$459,000
$630,000
$423,000
$1,809,000
Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you
Direct Materials Budget - Year 2
Quarter
Year 3 Quarter
First
Second
Third
Fourth
Year
1
Required Production in units of finished goods
60000
90000
150000
100000
400000
70000
Units of raw materials needed per unit of finished goods
3
3
3
3
3
3
Units of raw materials needed to meet production
180000
270000
450000
300000
1200000
210000
Add: Desired Ending Raw Material Inventory (20% of next quarter's production need)
54000
90000
60000
42000
42000
Total Units of Raw materials needed
234000
360000
510000
342000
1242000
Less: Beginning Raw material inventory (ending inventory of last month)
36000
54000
90000
60000
36000
Units of Raw materials to be purchased
198000
306000
420000
282000
1206000
Unit Cost of raw materials
$1.50
$1.50
$1.50
$1.50
$1.50
Cost of raw materials to be purchased
$297,000
$459,000
$630,000
$423,000
$1,809,000