Two grams of musk oil are required for each bottle of Mink Caress, a very popular perfume
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Question:
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 | 76,000 | 106,000 | 166,000 | 116,000 | 86,000 |
The inventory of musk oil at the end of a quarter must be equal to 20% of the following quarters production needs. Some 30,400 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.
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