Three grams of musk oil are required for each bottle of Mink Caress, a very popu
ID: 2561420 • 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 $1.80 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3 Year2 First Second Third Fourth 66,000 96,000 156,000 106,000 Year3 First 76,000 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 39,600 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 Units of raw materials needed per unit of finished goods Units of raw materials needed to meet productionExplanation / Answer
Mink cares Direct material Budget - Year 2 Quarter Particulars First Second Third Fourth Year Budgeted production 66,000 96,000 156,000 106,000 424,000 Units of raw material needed per units of finished goods 3 3 3 3 3 Units of raw material needed to meet production 198,000 288,000 468,000 318,000 1,272,000 Opening raw material 39,600 57,600 93,600 63,600 Total Units of raw material needed 237,600 345,600 561,600 381,600 1,526,400 Closing raw material 57,600 93,600 63,600 15,200 Units of raw material to be purchased 216,000 324,000 438,000 269,600 1,247,600 Units of cost of raw material $ 1.80 $ 1.80 $ 1.80 $ 1.80 Cost of raw material to purchased $ 388,800 $ 583,200 $ 788,400 $ 485,280 $ 2,245,680