Question

?? Please help with empty places and red wrong answers ..

Three grams of musk oil are required for each bottle of Mink Caress, a very popular perfume made by a small company in westerm Siberia. The cost of the musk oil is $1.50 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3 Year 2 First Seoond ThirdFourth 60,000 90,000 150,000 100,000 Year 3 rst 70,000 Budgeted production, in bottles Musk oil has become so popular as a perfume ingredient that it has become necessary to carry large inventories as a precaution against stock-outs. For this reason, the inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 36,000 grams of musk oil will be on hand to start the first quarter of Year 2 Required: Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2 (Round "Unit cost of raw materials" answers to 2 decimal places.) Answer is not complete Direct Materials Budget - Year 2 Quarter First Year Required production in units of finished goods Units of raw materials needed per unit of finished goods Units of raw materials needed to meet production Add: Desired units of ending raw materials inventory Total units of raw materials needed Less: Units of beginning raw materials inventory Units of raw materials to be purchased Unit cost of raw materials 0,000 0,000 50,000 00,000 00,000 180,000 4,000 234,000 36,000 198,000 270,000 0,000 360,000 4,000 306,000 450,000 60,000 510,000 90,000 420,000 300,000 1,200,000 36,000X 0,000 (60,000) 1,236,000 36,000 1,200,000 198,000.00X S 306,000.00XS 420,000.00x S282,000.0oX$ 1,206,000.00X Cost of raw materials to purchased $39.204.000,000 $93,636,000,000 176400,000,000 1,447,200,000,000

My questions is: How do you arrive at the numbers for " Less Units of Beginning of Raw Materials Inventory: 36,000, 54,000, 90,000, 60,000 & 36,000?

Thanks!

Answer 1

36,000 is mentioned in the question as 36,000 grams of musk oil will be on hand to start the first quarter of year 2. It is the beginning inventory for the first quarter.

Ending inventory of the first quarter 54,000 units which is 20% of the second quarter's production needs (90,000units*3per unit*20%) is the beginning inventory for the second quarter.

Ending inventory of the second quarter 90,000 units which is 20% of the third quarter's production needs (150,000units*3per unit*20%) is the beginning inventory for the third quarter.

Ending inventory of the third quarter 60,000 units which is 20% of the second quarter's production needs (100,000units*3per unit*20%) is the beginning inventory for the fourth quarter.

Beginning raw materials inventory for the first quarter which is 36,000 is what on hand at the beginning of the year and it is the beginning raw materials inventory for the year.