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 $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: First 94,000 Year 2 Second Third 124,00 184,80 Fourth 134,000 Year 3 First 104, 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 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 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 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

Answer 1

Mink Caress
Direct material Budget Year 2	Quarter					Year 3
	First	Second	Third	Fourth	Year	First
Required Production in units of finished goods	94,000.00	124,000.00	184,000.00	134,000.00	536,000.00	104,000.00
Units of Raw materials needed per unit of finished goods	× 4	× 4	× 4	× 4	× 4	× 4
Units of Raw materials needed to meet production	376,000.00	496,000.00	736,000.00	536,000.00	2,144,000.00	416,000
Add : Desired ending raw materials inventory	99,200.00	147,200.00	107,200.00	83,200.00	83,200.00
Total units of raw materials needed	475,200.00	643,200.00	843,200.00	619,200.00	2,227,200.00
Less: beginning  raw materials inventory	75,200.00	99,200.00	147,200.00	107,200.00	75,200.00
Units of raw materials to be purchased	400,000.00	544,000.00	696,000.00	512,000.00	2,152,000.00
Unit cost of raw materials	x  $1.80	x  $1.80	x  $1.80	x  $1.80	x  $1.80
Cost of raw materials to be purchased	720,000.00	979,200.00	1,252,800.00	921,600.00	3,873,600.00

1 Four grams of musk oil are required for each bottle of Mink Caress, a very popular perfume made by a small company in western S 2 Budgeted Production in bottles 3 Year 2 4 Qtr 1 94000 5 Qtr 2 124000 6 Qtr 3 184000 7 Qtr 4 134000 8 Year 3 9 Qtr 1 104000 10 Musk oil has become so popular as a perfume ingredient that it has become necessary to carry large inventories as a precaution ag 11 Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2. 12 Mink Caress 13 Direct material Budget Year 2 14 First 15 Required Production in units of finished goods =B4 16 Units of Raw materials needed per unit of finished goods X4 17 Units of Raw materials needed to meet production =B15*4 18 Add: Desired ending raw materials inventory =C17*20% 19 Total units of raw materials needed =B17+B18 20 Less: beginning raw materials inventory 75200 21 Units of raw materials to be purchased =B19-B20 22 Unit cost of raw materials x $1.80 23 Cost of raw materials to be purchased =B21*1.8 Year Quart Second =B5 X4 =C1504 =D17-20% =C17+C18 =B18 =C19-20 x $1.80 =C21*1.8 Third =B6 X4 =D154 =E17*20% =D17+D18 =C18 =D19-D20 x $1.80 =D21*1.8 Fourth =B7 X4 =E15*4 =G1720% =E17+E18 =D18 =E19-E20 x $1.80 =E211.8 =SUM(B15:E15) X4 =F1504 =E18 =F17+F18 =B20 =F19-F20 x $1.80 =F21*1.8