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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.

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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 oil is $2.20 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3: First 86,000 Year 2 Second Third Fourth 116,000 176,000 126,000 Year 3 First 96,000 Budgeted production, in bottles 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 34,400 grams of musk oil will be on hand to start the first quarter of Year Required: Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2. Third Fourth Year 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 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 1

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