Three grams of musk oil are required for each bottle of Mink Caress, a popular...
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Accounting
Three grams of musk oil are required for each bottle of Mink Caress, a popular perfume made by a company in western Siberia. The cost of the musk oil is $1.60 per gram. Budgeted quarterly production of Mink Caress is given below for Year 2 and the first quarter of Year 3:
Year 2
Year 3
First
Second
Third
Fourth
First
Budgeted production, in bottles
62,000
92,000
152,000
102,000
72,000
The inventory of musk oil at the end of a quarter must equal 20% of the following quarters production needs. A total of 37,200 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.
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