Question

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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 $2.10 per gram.

Answer 1

Solution

Mink Caress
Direct Materials Budget
	Quarter
	First	Second	Third	Forth	Year
Required Production in Units of Finished Goods	70000	100000	160000	110000	440000
Units of Raw material needed per Unit of Fished Goods	3	3	3	3	3
Units of Raw material needed to meet Production	210000	300000	480000	330000	1320000
Desired Ending Inventory of Raw Material	60000	96000	66000	48000	48000
Total Units of Raw material Needed	270000	396000	546000	378000	1368000
Beginning Inventory of Raw Material Available	42000	60000	96000	66000	42000
Units of Raw material to be Purchased	228000	336000	450000	312000	1326000
Unit cost of Raw Material	$ 2.10	$ 2.10	$ 2.10	$ 2.10	$ 2.10
Cost of Raw Material to be Purchased	$ 478,800	$ 705,600	$ 945,000	$ 655,200	$ 2,784,600