EXERCISE 8-3 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 $1.50 per gram. Budgeted pro- duction 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. 60,000 90,000 150,000 100.000 70.000 Musk oil 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 oil at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 3600) grams of musk oil will be on hand to start the first quarter of Year 2