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Four ounces of zinc oxide are required for each bottle of Hawaiian Gold, a suntan lotion made in Orange, California. The zinc oxide cost is $2.10 per ounce. Budgeted production of Hawaiian Gold is given below by quarters for Year 2 and for the first quarter of Year 3 First 98,000 Year 2 Second Third 128,000 188,000 Fourth 138,000 Year 3 First 108,000 Budgeted production, in bottles There is a high demand for zinc oxide which requires the company to have large inventories of the ingredient in case of a shortage. For this reason, the zinc oxide inventory at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 78,400 ounces of zinc oxide will be on hand to start the first quarter of Year 2 Required: Prepare a direct materials budget for zinc oxide, by quarter and in total, for Year 2. Hawaiian Gold Third Fourth Year Direct Materials Budget - Year 2 Quarter First Second Required production in units of finished goods Units of raw materials needed per unit of finished goods Units of raw materials needed to meet production Add: Desired units of ending raw materials inventory Total units of raw materials needed Less: Units of beginning raw materials inventory Units of raw materials to be purchased Unit cost of raw materials Cost of raw materials to purchased

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