Exercise 8-3 (Algo) Direct Materials Budget (LO8-4] Two 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 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: Budgeted production, in bottles Year 2 Year 3 Firat 78,000 Second Third 108,000 168,000 Fourth 118,000 First 88,000 The inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 31,200 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. Mink Caress 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 Direct Materials Budget-Year 2 First Quarter 78,000 Second Quarter Third Quarter Fourth Quarter Year 108,000 168,000 2 2 2 118,000 2 156,000 216,000 336,000 236,000 A $ 1.70 $ 1.70 $ 1.70 $ 1.70 $ 1,70 2