a instructure-uploads.s3.amazonaws.com Genuine Spice Inc. began operations on January 1, 2016. The company produces a hand and body lotion in an eight-ounce bottle called Eternal Beauty. The lotion is sold wholesale in 12- bottle cases for $100 per case. There is a selling commission of $20 per case. The materials, direct labor, and factory overhead costs are as follows: January direct DIRECT MATERIALS Cost Units Cost Direct Materials per Ut Cost per Case Behavior per Case Variable 100 ozs $2.00 Cream base S0.02 Variable 30 ozs Natural oils 9.00 0.30 12 bottles Bottle (8-oz.) Variable 0.50 6.00 $17.00 DIRECT LABOR Cost Time Labor Rate Direct Labor Department Behavior per Case per Hour Cost per Case Variable Mixing 20 min. S18.00 S6.00 Variable Filling 14.40 1.20 25 min. $7.20 FACTORY OVERHEAD Cost Behavior Total Cost Utilities Mixed S600 14,000 Facility lease Fixed Fixed Equipment depreciation 4,300 Supplies Fixed 660 S19,560 M. Baker Page 1 During July of the current year, the management of Genuine Spice Inc. asked the controller to prepare August manufacturing and income statement budgets. Demand was expected to be 1,500 cases at S100 per case for August. Inventory planning information is provided as follows: Finished Goods Inventory: Case Cost 00 S12,000 Estimated finished goods inventory, August 1, 2016 175 7,000 Desired finished goods inventory, August 31, 2016 Materials Inventory: Cream Bse Oils (ozs.) Bottles (ozs) (bottles) Estimated materials inventory, August 1, 2016 250 290 600 Desired materials inventory, August 31, 2016 1,000 360 240 There was negligible work in process inventory assumed for either the beginning or end of the month; thus, none was assumed. In addition, there was no change in the cost per unit or estimated units per case operating data from January Required 5. Prepare the August production budget. Enter all amounts as positive numbers Genuine Spice Inc. Production Budget For the Month Ended August 31, 2016 Cases xpected cases to be sold lus desired ending inventory otal ess estimated beginning inventory otal units to be produced 6. Prepare the August direct materials purchases budget. Enter the unit price to the nearest cent. Enter all amounts as positive numbers Genuine Spice Inc. Direct Materials Purchases Budget For the Month Ended August 31, 2016 Cream Base (ozs Natural Oils ozs Bottles (bottles Total Units required for ion lus desired ending nventory ess estimated eginning inventory irect materials to be urchased nit price otal direct materials o be purchased 7. Prepare the August direct labor budget. For hours required, round to nearest whole hour. For hourly rate, enter to the nearest cent, if required Genuine Spice Inc Direct Labor Budget For the Month Ended August 31, 2016 Total Hours required for production of: Fillin Mixin land and body lotion Hourly rate otal direct labor cost
