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 $1.60 per gram. Budgeted
production of Mink Caress is given below by quarters for Year 2 and
for the first quarter of Year 3:
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Year 2 |
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Year 3 |
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First |
Second |
Third |
Fourth |
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First |
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| Budgeted production, in bottles |
90,000 |
120,000 |
180,000 |
130,000 |
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100,000 |
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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 72,000 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.)
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Quarter |
Quarter |
Quarter |
Quarter |
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First |
Second |
Third |
Fourth |
Year |
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| Units of raw material need per unit of finished good |
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| Units of raw material needed to meet production |
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| Total units of raw materials needed |
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| Unit of raw materials to be purchased |
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| Unit cost of raw materials |
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| Cost of raw material to purchase |
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