Two grams of musk oil are required for each bottle of Mink Caress, a very...
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Accounting
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 $1.60 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 | 62000 | 92000 | 152000 | 102000 | 72000 | ||
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 quarters production needs. Some 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 q
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