3 Exercise 8-3 (Algo) 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 oll 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: 162/1.87 points awarded Scored Budgeted production, in bottles First 78,000 Year 2 Second Thied 108,000 168,000 Fourth 118,000 Year 3 First 88,000 The inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 31,200 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. Mink Caress Direct Materials Budget-Year 2 First Second Third Fourth Year Quarter Quarter Quarter Quarter 78,000 100,000 168,000 O Units of raw materials needed per unit of finished goods 20 20 20 00 118,000 472,000 O 20 2 Units of raw materials needed to meet production 156.000 216,000 336,000 236,000 944,000 Add: Desired units of ending raw materials inventory O 43,200 67,200 O 47.200 35,200 192,800 O Total units of raw materials needed 199.200 283,200 383,200 O 271.200 O 1,136,800 Add: Desired units of ending raw materials inventory 31,200 43,200 O 67.200 47,200 O 188,800 O Units of new materials to be purchased 168.000 240,000 316,000 224,000 948,000 Unit cost of raw materials Cost of raw materials to purchased 1.70 $ $285,600 1.700$ 1.705 1.70 $ 1.70 O 408,000 $537,200 380,800 $1,611,000