Question

Exercise 8-3 Direct Materials Budget [LO8-4]

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 $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 | Second | Third | Fourth | First | |||

Budgeted production, in bottles | 92,000 | 122,000 | 182,000 | 132,000 | 102,000 | ||

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.

Answer #1

Year 1 | Year 2 | ||||

Quarter | First | Second | Third | Fourth | First |

Budgeted Production | 92000 | 122000 | 182000 | 132000 | 102000 |

Musk Oil Required for production in grams (4grms/bottle) | 368000 | 488000 | 728000 | 528000 | 408000 |

Closing inventory | 97600 | 145600 | 105600 | 81600 | 0 |

Opening Inventory | 73600 | 97600 | 145600 | 105600 | 81600 |

Inventory to be purchase | 392000 | 536000 | 688000 | 504000 | 326400 |

Cost of Musk oil per gram | $ 1.70 | $ 1.70 | $ 1.70 | $ 1.70 | $ 1.70 |

Total Purchase cost will be | $ 666,400 | $ 911,200 | $ 1,169,600 | $ 856,800 | $ 554,880 |

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Exercise 8-3 Direct Materials Budget [LO8-4]
Three 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 $1.80 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
Second
Third
Fourth
First
Budgeted production, in bottles
66,000
96,000
156,000
106,000
76,000...

Exercise 8-3 Direct Materials Budget [LO8-4]
Two 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 $1.80 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
Second
Third
Fourth
First
Budgeted production, in
bottles
80,000
110,000
170,000
120,000
90,000...

Exercise 7-3 Direct Materials Budget [LO7-4]
Two 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 3
First
Second
Third
Fourth
First
Budgeted production,
in bottles
86,000
116,000
176,000
126,000...

chapter 8 q 2
Two 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 $1.80 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
Second
Third
Fourth
First
Budgeted
production, in bottles
80,000
110,000
170,000
120,000
90,000
Musk oil...

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 3 First Second Third
Fourth First Budgeted production, in bottles 100,000 130,000
190,000 140,000 110,000 Musk oil has become so popular...

Two 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 $2.10 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
Second
Third
Fourth
First
Budgeted production, in bottles
84,000
114,000
174,000
124,000
94,000
Musk oil has become so popular...

Three 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 3
First
Second
Third
Fourth
First
Budgeted
production, in bottles
72,000
102,000
162,000
112,000
82,000
Musk oil has become so
popular...

Two 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
First
Second
Third
Fourth
First
Budgeted production,
in bottles
74,000
104,000
164,000
114,000
84,000
Musk oil has become...

Two 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:
Year 2
Year 3
First
Second
Third
Fourth
First
Budgeted production, in bottles
76,000
106,000
166,000
116,000
86,000
Musk oil has become so popular...

Two 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
Second
Third
Fourth
First
Budgeted production, in bottles
78,000
108,000
168,000
118,000
88,000
Musk oil has become so popular...

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