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. 6 Compute the target selling price. Total cost per unit Markup Target selling price

Answer 1

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Frontleg Chocolate Company
Material cost per unit- Cacao	Amount $
Cacao required per unit	5.00	B
Cost per pound	2.95	D
Material cost per unit- Cacao	14.75	E=C*D
Material cost per unit- Cane Sugar	Amount $
Cane Sugar required per unit	4.00	F
Cost per pound	0.50	H
Material cost per unit- Cane Sugar	2.00	I=G*H
Total Material cost per unit	16.75	J=E+I
Direct Labor cost per unit	Amount $
Labor Hour required per unit	0.50	K
Cost per Hour	20.00	M
Direct Labor cost per unit	10.00	N=L*M
Manufacturing overhead per unit
Variable manufacturing overhead per unit	Amount $
Direct Labor Budget	10.00	See N
Variable manufacturing overhead rate	150%	O
Manufacturing overhead per unit	15.00	P=N*O
Total Cost per unit	41.75	U=J+N+P+T
Markup at 30%	12.53	V
Target Selling Price	54.28	W=U+V