EXERCISE 8-2 Production Budget LO8-3 Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows: Unit Sales April . . . . 50,000 May . .. . 75,000 June 90,000 July ... 80,000 I The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-month inventory levels must equal 10% of the following month's unit sales. The inventory at the end of March was 5,000 units. Required: Using Schedule 2 as your guide, prepare a production budget by month and in total, for the second quarter. EXERCISE 8-3 Direct Materials Budget LO8-4 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 $1.50 per gram. Budgeted pro- duction of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3