Four grams of musk oil are required for each bottle of Mink Caress, a very popul

Question

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 $1.50 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

Year 3

    

    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 70,400 grams of musk oil will be on hand to start the first quarter of Year 2.

  

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.)

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 $1.50 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3:

Explanation / Answer

##Closing of Quarter 1 = 472000*20%

Closing of Quarter 2 = 712000*20%

Closing of Quarter 3 = 512000*20%

Closing of Quarter 4 = (98000*4)*20%

Direct Material Budget Quarter 1    Quarter 2 Quarter 3 Quarter 4 Budgeted Production in bottles 88000 118000 178000 128000 Musk Oil in Grams required per Bottle 4 4 4 4 Total Musk Oil Required in Grams 352000 472000 712000 512000 Add: Closing Inventory 94400 142400 102400 78400 Total Musk Oil Required in Grams 446400 614400 814400 590400 Less Opening Inventory 70400 94400 142400 102400 Musk OIl in Grams to be purchased 376000 520000 672000 488000

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.