Chapter 8 - Accounting 2

Four grams of musk oil are required for each bottle of Mink Caress, a very popular perfume made by a small company in western Slberia. 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 : 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 oll, by quarter and in total, for Year 2