PART I: BUDGETING

A- Materials: "EcoShield Bio-Resin" and 'NatureWrap Paperboard"

1- EcoShield Bio-Resin

Description: EcoShield Bio-Resin, a crucial component of BioGuard Food Packaging, is carefully crafted from renewable plant-based materials to provide barrier properties and durability while minimizing environmental impact. This bio-based resin ensures food freshness and protection without compromising sustainability.

Quantity per Unit: 0.25 kilogram

Cost per kilogram: $5.50

2- NatureWrap Paperboard

Description: NatureWrap Paperboard is utilized in the construction of BioGuard Food Packaging to provide structural integrity and printability while offering environmental benefits. Made from recycled paper fibers and certified by sustainable forestry programs, this paperboard ensures product safety and sustainability throughout its lifecycle.

Quantity per Unit: 0.5 square meter of recycled paperboard

Cost per Square meter: $1.25

B- Direct Labor Cost

Description: Direct labor includes the wages of skilled workers directly involved in the manufacturing process of BioGuard Food Packaging. This encompasses machine operators, quality assurance personnel, and packaging specialists dedicated to maintaining product quality and sustainability standards.

Direct Labor Hours per Unit: 0.05 hour

Hourly Wage Rate: $16.00 per hour

C- Manufacturing Overhead Cost

Description: Manufacturing overhead (MO) involves indirect costs essential for production, including machinery depreciation, utilities, maintenance, supervision salaries, indirect labor wages, and factory insurance. These costs, related to machinery and facilities, collectively contribute to the overall manufacturing overhead, supporting efficient production processes. A variable overhead rate is estimated per machine hour.

Machine Hours per Unit: 0.02 hour

Variable MO Costs per Machine Hour: $18.50

Fixed MO Cost per Quarter: $16,500

D- Selling and admirative costs

Marketing and administrative costs are divided into variable and fixed elements. Variable marketing costs, tied to advertising and promotions, shift with sales and campaigns, while fixed marketing costs, covering salaries and contracts, remain constant. On the administrative side, variable costs, linked to business activities like office supplies, fluctuate, while fixed costs, including staff salaries and office rent, stay stable.

Variable cost: 4% of sales

Fixed costs: $38,600 per quarter

E- Inventory