Exercise 8-3 (Algo) 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 $2.10 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3: Year 2 Year 3 First Second Third Fourth First Budgeted production, in bottles 70,000 100,000 160,000 110,000 80,000 The inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 42,000 grams of musk oil will be on hand to start the first quarter of Year 2. Required: Prepare a direct materials budget for muskoll, by quarter and in total, for Year 2. Fourth Quarter Year Mink Caress Direct Materials Budget - Year 2 First Quarter Second Quarter Third Quarter 70,000 100,000 180,000 3 3 210,000 300,000 480,000 60.000 96,000 66,000 110,000 3 330,000 Required production in units of finished goods 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 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 $ 2.10 $ 2.10 5 2.10 $ 2.10 $ 2.10