Question
Three grams of musk oil are required for each bottle of Mink Caress, a very popular perfume made by a small company in Ohio. The
Three grams of musk oil are required for each bottle of Mink Caress, a very popular perfume made by a small company in Ohio. The cost of the musk oil is $150 per kilogram. 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.... | 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 the quarter must be equal to 20% of the following quarters production needs. Some 36,000 grams of musk oil will be on hand to start the first quarter of Year 2. What are the budgeted purchases in dollars for Year 2? Do not use decimals in your answer.
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