Question

Frontleg Chocolate Company manufactures and sells a premium chocolate called PremiumChoco. The following
data are available for preparing budgets for PremiumChoco for June through August of 2020.
1. Sales: June , 30,000 pounds; July, 56,000 pounds, August 58,000 pounds.
2. Direct materials: each pound of PremiumChoco requires 5 pounds of cacao seeds at a cost of $2.95 per
pound and 4 pounds of cane sugar at $.50 per pound.
3. Desired inventory levels:
	Type of Inventory	May 1	June 1	July 1	August 1
	PremiumChoco (pounds)	7,000	8,000	15,000	18,000
	cacao seeds (pounds)	6,000	9,000	10,000	13,000
	cane sugar (pounds)	5,000	14,000	20,000	25,000
4. Direct labor: direct labor time is 30 minutes per pound at an hourly rate of $20 per hour.
5. Selling and administrative expenses are expected to be .05 cents per unit sold plus $82,000 per month.
6.     Your assistant has prepared two budgets: (1) The manufacturing overhead budget shows expected
costs to be 150% of direct labor cost (all variable costs).
7. The company uses a 30% markup percentage on total cost
8. Interest Expense is $150,000.
9. Income taxes are expected to be 21% of income before income taxes. Prepare direct materials table for cane sugar.
Frontleg Chocolate Company 2bDirect Materials Budget - Cane Sugar For the Three Months Ending August 31, 2020 MonthThree June JulyAugustMonths Units to be produced    Direct materials per unit (lbs.)    Total pounds needed for production    Add: Desired ending direct materials (lbs.)    Total materials required    Less: Beginning direct materials (lbs.)    Direct materials purchases    Cost per pound    Total cost of direct materials purchases

Answer 1

	June	July	August
Sales Level	30000	56000	58000
Add :Desired Ending Inventory	15000	18000	0
Total	140000	249000	232000
Less : Beginning Inventory	8000	15000	18000
Production Required	132000	234000	214000

Direct Material Budget of Cane Sugar	Cane Sugar	Cane Sugar	Cane Sugar
	June	July	August
Unit of Premium choco Produced	132000	234000	214000
Direct Material Per Unit	4	4	4
Total Pound needed	528000	936000	856000
Add :Desired Ending Inventory	20000	25000	0
Total Materials Required	548000	961000	856000
Less : Beginning Inventory	14000	20000	25000
Direct Material Purchase	534000	941000	831000
Cost Per Pound	0.5	0.5	0.5
Total Cost	267000	470500	415500

The August 31st inventory level is not provided and thus, the closing inventory for August month is taken as NIL.