Exercise 8-3 (Algo) Direct Materials Budget [LO8-4] Four grams of musk oll 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 $1.50 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 Year 2 Year 3 First 88,000 Second 118,000 178,000 Third Fourth 128,000 First 98,000 The Inventory of musk oll at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 70,400 grams of musk oll 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. Units of raw matenals needed per unit of finished goods Units of raw materials needed to meet production Add: Desired units of ending raw materials inventory Total units of raw materials needed Less: Units of beginning raw materials inventory Units of raw materials to be purchased Unit cost of raw materials Cost of raw materials to purchased Mink Caress Direct Materials Budget - Year 2 First Quarter Second Quarter 118,000 Third Quarter Fourth Quarter Year 178,000 128,000 512.000 88,000 4 4 352.000 04.400 472,000 142,400 712,000 102,400 512,000 78,400 2,048.000 78,400 1.50 5 1.50 $ 1.50 $ 1.50 $ 1.50