Solution-Create a direct materials budget for musk oil

Create a direct materials budget for musk oil

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Reference no: EM132515686

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:

Question 1: Create a direct materials budget for musk oil, by quarter and in total, for Year 2.

Reference no: EM132515686

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Create a direct materials budget for musk oil

Reference no: EM132515686

Reference no: EM132515686

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