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Exercise 8-3 Direct Materials Budget (L08-4) Three grams of musk oil are required for each bottle of Mink Caress, a very popular perfume made by
Exercise 8-3 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 $170 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 First Second Third Fourth 64,000 94,000 154,000 104,000 200 Year 3 First 74,000 74 Budgeted production, in bottles Musk oll has become so popular as a perfume Ingredient that it has become necessary to carry large inventories as a precaution against stock-outs. For this reason, the inventory of musk oll at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 38,400 grams of musk oll will be on hand to start the first quarter of Year 2 Required: Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2. (Round "Unit cost of raw materials" answers to 2 decimal places.) Mink Caress Direct Materials Budget - Year 2 Quarter First Second 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 Third Fourth Year Total units of raw materials needed Units of raw materials to be purchased Unit cost of raw materials Cost of raw materials to purchased
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