Question

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 $1.90 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3 Year 2 First Second Third Fourth 68,000 98,000 158,000 108, 000 Year 3 First 78,000 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 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. (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

Statement showing Materials Budget	Year 2					Year 3
Particulars	1	2	3	4	Year	1.00
Required production in unit of finished goods	68,000.00	98,000.00	158,000.00	108,000.00	432,000.00	78,000.00
Units of raw material needed per unit of finished good	3.00	3.00	3.00	3.00	3.00	3.00
Units of raw material needed to meet production	204,000.00	294,000.00	474,000.00	324,000.00	1,296,000.00	234,000.00
Ending Raw Materials at 20%	58,800.00	94,800.00	64,800.00	46,800.00	46,800.00
Total units of raw material needed	262,800.00	388,800.00	538,800.00	370,800.00	1,342,800.00
Less Beginning raw material	40,800.00	58,800.00	94,800.00	64,800.00	40,800.00
Unit of raw material to be purchased	222,000.00	330,000.00	444,000.00	306,000.00	1,302,000.00
Unit cost of raw materials	1.90	1.90	1.90	1.90	1.90
Cost of raw materials to be purchased	421,800.00	627,000.00	843,600.00	581,400.00	2,473,800.00