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.
Step-by-step 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