Four grams of musk oil are required for each bottle of Mink Caress, a very popular perfume made by a small company in we

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Four Grams Of Musk Oil Are Required For Each Bottle Of Mink Caress A Very Popular Perfume Made By A Small Company In We 1 (94.75 KiB) Viewed 13 times

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: Budgeted production, in bottles First 92,000 Units of raw materials needed per unit of finished goods Units of raw materials needed to meet production Total units of raw materials eeded Year 2 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. Units of raw materials to be purchased Unit cost of raw materials Cost of raw materials to purchased Third Fourth Second 122,000 182,000 132,000 Mink Caress Direct Materials Budget - Year 2 First Second Year 3 First 102,000 Quarter Third Fourth Year