60.1K

Verified Solution

Link Copied!

b

Exercise 8-3 Direct Materials Budget (L08-4) 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 $2.20 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 a First Second Third Fourth First Budgeted production in bottles 100,000 130,00 190,000 140,000 110,000 Musk oll 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 80,000 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 Mink Carese Direct Materials Budget - Year 2 Quarter First Second Third Fourth Year Units of raw materials needed per unit of finished goods Units of fw materials needed to meet production Musk oil has become so popular as a perfume ingredient that it has become necessary to carry large inventories as a precauti 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 qua production needs. Some 80,000 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 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 & Explanation Solved by verified expert

See Answer