Question

3. value: 1.50 points 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 $1.70 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 Year 3 First 102,000 First 92,000 Third Second Fourth Budgeted production, in bottles 122,000 182,000 132.000 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 73,600 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 Fourth First Second Third 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 Total units of raw materials needed 0 0 Units of raw materials to be purchased 0 0 0 0 0 Unit cost of raw materials Cost of raw materials to be purchased

Answer 1

Direct material budget

	1st quarter	2nd quarter	3rd quarter	4th quarter	Year
Required Production in units of finished goods	92000	122000	182000	132000	528000
Units of raw material needed per unit of finished goods	4	4	4	4	4
Units of raw material needed to meet production	368000	488000	728000	528000	2112000
Add: Desired ending inventory	97600	145600	105600	81600	81600
Total units of raw material needed	465600	633600	833600	609600	2193600
Less: Beginning inventory	-73600	-97600	-145600	-105600	-73600
Units of raw material to be purchased	392000	536000	688000	504000	2120000
Unit cost of raw materials	1.7	1.7	1.7	1.7	1.7
Cost of raw materials to be purchased	666400	911200	1169600	856800	3604000