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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

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
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ACCOUNTING

Exercise 9-3 Direct Materials Budget [LO4] 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 150 roubles per kilogram. (Siberia is located in Russia, whose currency is the rouble.) 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 60,000 90,000 150,000 100,000 70,000

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 36,000 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. At the bottom of your budget, show the amount of purchases in roubles for each quarter and for the year in total. (Input all amounts as positive values.)

 

FILE: MS WORD

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