Three grams of musk oil are required for each bottle of MinkCaress, a very popular perfume made by a small company in westernSiberia. The cost of the musk oil is $1.50 per gram. Budgetedproduction of Mink Caress is given below by quarters for Year 2 andfor the first quarter of Year 3.
Budgeted production in bottles
| First | second | third | fourth | first (year 3) |
| 60,000 | 90,000 | 150,000 | 100,000 | 70,000 |
Musk oil has become so popular as a perfume ingredient that ithas become necessary to carry large inventories as a precautionagainst all stock-outs. For this reason the inventory of musk oilat the end of the quarter must be equal to 20% of the followingquarter's production needs. Some 36,000 grams of musk oil will beon hand to start the first quarter of year 2.
Required:
prepare a direct materials budget for musk oil, by quarter andin total, for year 2.
| first | second | third | fourth | year |
| required production in units of finished goods | 60,000 | 90,000 | 150,000 | 100,000 | 400,000 |
| units of raw materials needed per unit of finished goods | 3 | 3 | 3 | 3 | 3 |
| units of raw materials needed to meet production | 180,000 | 270,000 | 450,000 | 300,000 | 1,200,000 |
| add: Desired units of ending raw materials inventory | 54,000 | 90,000 | 60,00 | 42,000 | 42,000 |
| total units of raw material needed | 234,000 | 360,00 | | | |
| Less: units of beginning raw materials inventory | | | | | |
| units of raw materials to be purchased | | | | | |
| unit cost of raw materials | | | | | |
| cost of raw materials to be purchased | | | | | |
