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.

I included table 9a below for questions 9a and 9b. Instructions:

Instructions:

Compare the current 3 months (information above) with the prior year 3 months (table 9a below) using horizontal analysis and format into a table. Then, comment on the results of the analysis and give recommendations.

9a) Below is Frontlegs income statement for the same period in the prior year:
	Frontleg Chocolate Company
	Budgeted Income Statement
	For the Three Months Ending August 31, 2020
	Sales revenue			$10,000,000
	Cost of goods sold *			5,239,000
	Gross Profit			$4,761,000
	Selling and administrative expenses			225,000
	Income from operations			$4,536,000
	Interest expense			-
	Income before income tax			$4,536,000