Question

Frontleg Chocolate Company manufactures and sells 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 the total cost

8. Interest Expense is $150,000.

9. Income taxes are expected to be 21% of income before income taxes.

How do you find the production budget. Here is what I have so far:

Frontleg Choc. Comp.
Production Budget
For the Three Months Ending in August 31, 2020
	month			Three Months
	june	july	august
Expected unit sales	30,000	56,000	58,000
Add: Desired ending finished goods units	15,000	18,000	???
Total required units	45,000	74,000	???
Less: Beginning finished goods units	8,000	15,000	18,000
Required production units	37,000	59,000	???	???

Answer 1

Production Budget

Frontleg Chocolate Company
Production Budget
	June	July	August	Three Months
Expected unit sales	30,000	56,000	58,000	144,000
Add: Desired ending finished goods units	8,000	15,000	18,000	18,000
Total required units	38,000	71,000	76,000	162,000
Less: Beginning finished goods units	7,000	8,000	15,000	7,000
Required production units	31,000	63,000	61,000	155,000