hree 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 $1.70 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 Year 3 First Second Third
Fourth First Budgeted production, in bottles 64,000 94,000 154,000
104,000 74,000 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 38,400 grams of musk oil
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.)
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