Question

Four 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 $2.20 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3: Aints Year 2 First 100,000 Budgeted production, in bottles second 130,000 Year 3 First 110,000 third Fourth 190,000 140,000 eBook Hint Peint 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 80,000 grams of musk oil will be on hand to start the first quarter of Year 2 References 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

Answer 1

Answer

Mink Caress
Direct material Budget
	First	Second	Third	Forth
Production	100,000	130,000	190,000	140,000
Units of material needed per unit for production	4	4	4	4
Units of material needed for production	400,000	520,000	760,000	560,000
Add: Closing Stock of Raw material	104,000	152,000	112,000	88,000
Total units of raw material required	504,000	672,000	872,000	648,000
Less: Opening stock of Raw material	80,000	104,000	152,000	112,000
Units of raw material to be purchased	424,000	568,000	720,000	536,000
Unit cost of raw material	$             2.20	$                2.20	$                2.20	$                2.20
Cost of raw materials to be purchased	$ 932,800.00	$ 1,249,600.00	$ 1,584,000.00	$ 1,179,200.00

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