Exercise 8-3 (Algo) Direct Materials Budget (L08-4) 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 $1.80 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3: Parat 66,000 Year 2 Second Third Fourth 96,000 156,000 106,000 Year Pirat 76,000 Budgeted production, in bottles The Inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 39,600 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. Year Fourth 106,000 Mink Caress Direct Materials Budget - Year 2 Quarter First Second Third Required production in units of finished goods 60.000 90.000 150,000 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 is of raw materials needed Low Desired units of ending tower inventory Urts of uw materials to be purchased Unt cost of raw materials Cost of raw materials to purchased Exercise 8-3 (Algo) Direct Materials Budget (L08-4) 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 $1.80 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3: Parat 66,000 Year 2 Second Third Fourth 96,000 156,000 106,000 Year Pirat 76,000 Budgeted production, in bottles The Inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 39,600 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. Year Fourth 106,000 Mink Caress Direct Materials Budget - Year 2 Quarter First Second Third Required production in units of finished goods 60.000 90.000 150,000 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 is of raw materials needed Low Desired units of ending tower inventory Urts of uw materials to be purchased Unt cost of raw materials Cost of raw materials to purchased