FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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**Transcription for Educational Website**

---

Three grams of musk oil are required for each bottle of Mink Caress, a popular perfume made by a company in western Siberia. The cost of the musk oil is $1.90 per gram. Budgeted quarterly production of Mink Caress is given below for Year 2 and the first quarter of Year 3:

|                     | Year 2                  | Year 3  |
|---------------------|-------------------------|---------|
| Budgeted production, in bottles |            |         |
| **Quarter**  | **First** | **Second** | **Third** | **Fourth** | **First** |
| **Bottles**  | 68,000    | 98,000      | 158,000    | 108,000    | 78,000    |

The inventory of musk oil at the end of a quarter must equal 20% of the following quarter’s production needs. A total of 40,800 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.

**Mink Caress**  
**Direct Materials Budget - Year 2**

|                                      | Quarter                                   | Year   |
|--------------------------------------|------------------------------------------|--------|
|                                      | **First** | **Second** | **Third** | **Fourth** |        |
| 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 purchased                     |               |               |               |                |        |

---

**Diagram Explanation:**

The table is designed to help calculate the direct materials budget needed for musk oil used in making Mink Caress perfume. The budget displays the planned quarterly production in units and leaves space to fill in details related to raw materials requirements and costs. The information includes:
- Total production needs per quarter
- Total units of raw materials needed
- Units to be purchased, considering beginning inventory
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Transcribed Image Text:**Transcription for Educational Website** --- Three grams of musk oil are required for each bottle of Mink Caress, a popular perfume made by a company in western Siberia. The cost of the musk oil is $1.90 per gram. Budgeted quarterly production of Mink Caress is given below for Year 2 and the first quarter of Year 3: | | Year 2 | Year 3 | |---------------------|-------------------------|---------| | Budgeted production, in bottles | | | | **Quarter** | **First** | **Second** | **Third** | **Fourth** | **First** | | **Bottles** | 68,000 | 98,000 | 158,000 | 108,000 | 78,000 | The inventory of musk oil at the end of a quarter must equal 20% of the following quarter’s production needs. A total of 40,800 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. **Mink Caress** **Direct Materials Budget - Year 2** | | Quarter | Year | |--------------------------------------|------------------------------------------|--------| | | **First** | **Second** | **Third** | **Fourth** | | | 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 purchased | | | | | | --- **Diagram Explanation:** The table is designed to help calculate the direct materials budget needed for musk oil used in making Mink Caress perfume. The budget displays the planned quarterly production in units and leaves space to fill in details related to raw materials requirements and costs. The information includes: - Total production needs per quarter - Total units of raw materials needed - Units to be purchased, considering beginning inventory
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