Three ounces of zinc oxide are required for each bottle of Hawaiian Gold, a suntan...
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Three ounces of zinc oxide are required for each bottle of Hawaiian Gold, a suntan lotion made in Orange, California. The zinc oxide cost is $2.20 per ounce. Budgeted production of Hawaiian Gold is given below by quarters for Year 2 and for the first quarter of Year 3: First 72,000 Year 2 Second Third Fourth 102,000 162,000 112,000 Year 3 First 82,000 Budgeted production, in bottles There is a high demand for zinc oxide which requires the company to have large inventories of the ingredient in case of a shortage. For this reason, the zinc oxide inventory at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 43,200 ounces of zinc oxide will be on hand to start the first quarter of Year 2. Required: Prepare a direct materials budget for zinc oxide, by quarter and in total, for Year 2. Hawaiian Gold 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
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