Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Four grams of musk oil are required for each bottle of Mink Caress, a very popular perfume made by a small company in western
Siberla. 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:
Year 3
First
104,000
Year 2
Third
Fourth
First
94,000 124,000 184,000 134,000
Second
Budgeted production, in bottles
Musk oll 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 oill at the end of a quarter must be equal to 20% of the following quarter's
production needs. Some 75,200 grams of musk oil will be on hand to start the first quarter of Year 2.
Required:
Prepare a direct materials budget for musk ol, by quarter and in total, for Year 2.
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 production
Total units of raw materials needed
Units of raw materials to be purchased
Unit cost of raw materials
Cost of raw materials to purchased
Transcribed Image Text:Four grams of musk oil are required for each bottle of Mink Caress, a very popular perfume made by a small company in western Siberla. 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: Year 3 First 104,000 Year 2 Third Fourth First 94,000 124,000 184,000 134,000 Second Budgeted production, in bottles Musk oll 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 oill at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 75,200 grams of musk oil will be on hand to start the first quarter of Year 2. Required: Prepare a direct materials budget for musk ol, by quarter and in total, for Year 2. 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 production Total units of raw materials needed Units of raw materials to be purchased Unit cost of raw materials Cost of raw materials to purchased
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