1. Determine the fixed and variable portion of the utility cost using the high-low method. Do not round your intermediate calculations and round variable cost per unit answers to two decimal places.

	At High Point	At Low Point
Variable cost per unit
Total fixed cost
Total cost

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1. Divide the difference between the highest and lowest total costs by the difference between the highest and lowest production units. Multiply the variable unit cost by the number of units for a month. Subtract this variable cost from the month's total cost.

2. Determine the contribution margin per case. Do not round your intermediate calculations and round your final answer to two decimal places.

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2. Sales minus variable costs equals contribution margin.

3. Determine the fixed costs per month, including the utility fixed cost from part (1).

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Score: 0/43

1	Total fixed costs:
2
3
4
5
6

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0 / 9

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3. Add all the fixed costs.

4. Determine the break-even number of cases per month. cases

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4. Divide fixed costs by unit contribution margin.

Production Budget

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5. Prepare the August production budget. Enter all amounts as positive numbers.

Genuine Spice Inc.
Production Budget
For the Month Ended August 31
	Cases
Plus
Total cases required
Less

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0 / 9

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5. Expected sales plus desired ending inventory minus beginning inventory equals production.

Direct Materials Purchases Budget

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6. Prepare the August direct materials purchases budget. Enter all amounts as positive numbers. Round unit price answers to two decimal places.

Genuine Spice Inc.
Direct Materials Purchases Budget
For the Month Ended August 31
	Cream Base (oz.)	Natural Oils (oz.)	Bottles (bottles)	Total
Plus
Total units required
Less
Total materials to be purchased
X

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0 / 27

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6. Production quantity plus desired ending inventory minus beginning inventory equals amount to be purchased. Multiply quantity by the unit price.

Direct Labor Cost Budget

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7. Prepare the August direct labor cost budget. Round the hours required for production to the nearest hour. Enter all amounts as positive numbers.

Genuine Spice Inc.
Direct Labor Cost Budget
For the Month Ended August 31
	Mixing	Filling	Total
X

Points:

0 / 10

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7. Multiply labor hours required by the direct labor rate.

Factory Overhead Cost Budget

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8. Prepare the August factory overhead cost budget. Enter all amounts as positive numbers. If an amount box does not require an entry, leave it blank. (Entries of zero (0) will be cleared automatically by CNOW.)

Genuine Spice Inc.
Factory Overhead Cost Budget
For the Month Ended August 31
	Fixed	Variable	Total
Factory overhead:
Utilities
Facility lease
Equipment depreciation
Supplies
Total

Points:

2.4 / 12

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8. Show all of the variable costs and all of the fixed costs.

Budgeted Income Statement

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9. Prepare the August budgeted income statement, including selling expenses. Enter all amounts as positive numbers. NOTE: Because you are not required to prepare a cost of goods sold budget, the cost of goods sold calculations will be part of the budgeted income statement.

Genuine Spice Inc.
Budgeted Income Statement
For the Month Ended August 31
Revenue from sales
Finished goods inventory, August 1
Direct materials:
Direct materials inventory, August 1
Direct materials purchases
Cost of direct materials available for use
Less direct materials inventory, August 31
Cost of direct materials placed in production
Direct labor
Factory overhead
Cost of goods manufactured
Cost of finished goods available for sale
Less finished goods inventory, August 31
Cost of goods sold
Gross profit
Selling expenses
Income before income tax

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0 / 16

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9. Start with budgeted sales. Add the cost of direct materials used in production, the direct labor, and the factory overhead to the beginning finished goods inventory. Subtract the ending finished goods inventory. Subtract cost of goods sold from sales. Subtract selling expenses.

Variance Analysis (Part C)

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10. Determine and interpret the direct materials price and quantity variances for the three materials. Round your answers to three decimal places. Enter a favorable variance as a negative amount, and an unfavorable variance as a positive amount.

Direct Materials Price Variance
	Cream Base		Natural Oils		Bottles
Difference
X
Direct materials price variance

Points:

0 / 24

Direct Materials Quantity Variance
	Cream Base		Natural Oils		Bottles
Difference
X
Direct materials quantity variance

Points:

0 / 27

The