hree 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 Year 3 First Second Third Fourth First Budgeted production, in bottles 68,000 98,000 158,000 108,000 78,000 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 40,800 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.)

The inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter’s production needs. Some 40,800 grams of musk oil will be on hand to start the first quarter of Year 2.

40800gr/3= 13,600 units

Requirements:

First-quarter:

Production= 68,000 units

Production for next quarter= (98,000*0.20)= 19600 units

Beginning inventory= 13,600 (-)

Total= 74,000*3= 222,000gr

Second-quarter:

Production= 98,000 units

Production for next quarter= (158,000*0.20)= 31,600 units

Beginning inventory= 19,600 (-)

Total= 110,000*3= 330,000gr

Third-quarter:

Production= 158,000 units

Production for next quarter= (108,000*0.20)= 21600 units

Beginning inventory= 31,600 (-)

Total= 148,000*3= 444,000gr

Fourth-quarter:

Production= 108,000 units

Production for next quarter= (78,000*0.20)= 15600 units

Beginning inventory= 31,600 (-)

Total= 92,000*3= 276,000gr

Total= 1,272,000gr