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Exercise 8-3 Direct Materials Budget (LO8-4] Four 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 $1.90 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 Second Third 126,000 186,000 First 96,000 Budgeted production, in bottles Year 3 First 106,000 Fourth 136,000 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 76,800 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.) Third 186,000 Fourth 136,000 Year 544,000 Mink Caress Direct Materials Budget - Year 2 Quarter First Second Required production in units of finished goods 96,000 126,000 Units of raw materials needed per unit of finished goods Units of raw materials needed to meet production Less: Units of beginning raw materials inventory Total units of raw materials needed 0 0 Less: Units of beginning raw materials inventory Units of raw materials to be purchased 0 0 Unit cost of raw materials Cost of raw materials to purchased 0 0 0 0 0

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