1. The final product (chocolate bar) requires two direct materials: raw cacao beans and packaging. One half of a pound of raw cacao beans are required for each 6-oz chocolate bar. Through moisture loss during roasting and removing of the shell during the winnowing process, about 25% of the total original weight of the beans is lost. Management desires to have materials on hand (i.e., pounds of cacao beans) at the end of each month equal to 15 percent of the following month's production needs. The beginning materials inventory, July 2018, is expected to be 2,106 pounds of cacao beans. These beans cost $8.00 per pound.
Packaging material is purchased by the roll and 100 bars are produced from each roll. The packaging is made from biodegradable, organic plant fiber that extends the shelf life of the chocolate bars while preserving its freshness. Management desires to have packaging on hand at the end of each month equal to 15 percent of the following month's production needs. The beginning inventory of packaging (i.e., rolls of packaging material) in July 2018 is expected to be 42 rolls. Packaging is expected to cost $11 per roll.
Need help in preparing a direct materials budget.
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