Three 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:

Three 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.

Explanation:

As given in the question

Three grams of musk oil is required for each bottle of Mink Caress. The cost of the musk oil is $1.90 per gram.

Budgeted production:

Quarter for Year 2:

First = 68,000

Second = 98,000

Third = 158,000

Fourth = 108,000

Year 3:

First: 78,000

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

40 800gr/3 = 13,600 units

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