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Comprehensive Problem 5 Instructions Amount Descriptions Questions (Part A) Production Budget Direct Materi Instructions Genuine Spice Inc. began operations on January 1 of the current year. The company produces eight- ounce botles of hand a There is a selling commission of $20 per case. The January direct materials, direct labor, and tactory overhead costs are as t DIRECT MATERIALS Cost Behavior Units per Case Cost per Unit Cost per Case Cream base Variable 100 oz s0.02 $2.00 30 oz Natural oils Variable 0.30 9.00 Bottle (8-oz) Variable 12 bottles 0.50 6.00 $17.00 DIRECT LABOR Department Cost Behavior Time per Case Labor Rate per Hour Cost per Case $6.00 $18.00 20 min Variable Maing 1.20 14 40 5 Variable Flling $7.20 25 min FACTORY OVERHEAD oal Coat Cost Bh 22-4.a Comprehensive Assignment Comprehensive Problem 5 Instructions Amount Descriptions Questions (Part A) Production Budget Direct Materials Purchases Budget Direct Labor C Instructions Genuine Spice Inc. began operations on January 1 off the current year. The company produces eight- ounce bottles of hand and body lotion called Etermal Beauty. The lotion There is a selling commission of $20 per case. The January direct materials, direct labor, and factory overhead costs are as follows DIRECT MATERIALS Cost Behavior Units per Case Cost per Unit Cost per Case Cream base Variable 100 oz $0.02 $2.00 Natural oils Variable 30 oz 0.30 9.00 Bottle (8-oz) Variable 12 bottles 0.50 6.00 $17.00 DIRECT LABOR Department Cost Behavior Time per Case Labor Rate per Hour Cost per Case c6.00 20min e19 00 Mving Mariabln Comprehensive Problem 5 Instructions Amount Descriptions Questions (Part A) Production Budget Direct Mater Instructions DIRECT LABOR Department Cost Behavior Time per Case Labor Rate per Hour Cost per Case Mixing Variable 20 min. $18.00 $6.00 Filling Variable 5 14.40 1.20 25 min. $7.20 FACTORY OVERHEAD Cost Behavior Total Cost Utilities Mixed $600 Facility lease Fixed 14,000 Equipment depreciation Fixed 4,300 660 Supplies Fixed $19,560 Part A-Break-Even Analysis The management of Genuine Spice Inc. wants to determine the number of cases required to break even per month. The irst six months of operation regarding this cost: Utility Total Cost Case Production S600 Januany 500 Comprehensive Problem 5 Amount Descriptions Instructions Questions (Part A) Production Budget Direct Materials Purchases Budget Direct Labor C Instructions Part A-Break-Even Analysis The management of Genuine Spice Inc. wants to determine the number of cases required to break even per month. The utilities cost, which is part of factory overhead, is a n first six months of operation regarding this cost Case Production Utility Total Cost 500 January $600 660 February 800 740 March 1,200 720 1,100 April 690 950 May 705 June 1,025 Required-Part A: 1. Determine the fixed and variable portion of the utility cost using the high-low method. Determine the contribution margin per case. 2. 3. Determine the fixed costs per month, including the utility fixed cost from part (1) Comprehensive Problem 5 Amount Descriptions Instructions Questions (Part A) Production Budget Direct Materials Purchases Budget Direct Labor C Instructions Required-Part A 1. Determine the fixed and yariable portion of the utility cost using the high-low method 2. Determine the contribution margin per case. 3. Determine the fixed costs per month, including the utlity fixed cost from part (1). 4. Determine the break-even number of cases per month. Part B-August Budgets 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 e Inventory planning information is provided as follows: Finished Goods Inventory: Cases Cost Estimated finished goods inventory, August 1 300 $12,000 Desired finished goods inventory, August 31 175 7,000 Materials Inventory Comprehensive Problem 5 Instructions Amount Descriptions Questions (Part A) Production Budget Direct Materials Purchases Budget Direct Labor C Instructions Cases Cost Estimated finished goods inventory, August 1 300 $12,000 Desired finished goods inventory, August 31 175 7,000 Materials Inventory Cream Base Oils Bottles (oz.) (oz) (bottles) Estimated materials inventory, August 1 250 290 600 Desired materials inventory, August 31 240 1,000 360 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 January Required-Part B: 5. Prepare the August production budget. Comprehensive Problem 5 Amount Descriptions Instructions Questions (Part A) Production Budget Direct Materials Purchases Budget Direct Labor C Instructions 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 January Required-Part B 5. Prepare the August production budget." Prepare the August direct materials purchases budget 6. 7. Prepare the August direct labor cost budget. Round the hours required for production to the nearest hour. 8. Prepare the August factory overhead cost budget. If an amount box does not require an entry, leave it blank. (Entries of zero (0) will be cleared automatically by CNOW) Prepare the August budgeted income statement, including selling expenses. NOTE: Because you are not required to preparea cost of goods 9. sold budget, the cost of goods sold calculations will be part of the budgeted income statement. Enter all amounts as positive numbers Part C-August Variance Analysis During September of the current year, the controller was asked to perform variance analyses for August. The January operating data provided the standard prices, rates, tim produced during August, which was 250 more cases than planned at the beginning of the month. Actual data for August were as follows: Comprehensive Problem 5 Instructions Amount Descriptions Production Budget Questions (Part A) Direct Materials Purchases Budget Direct Labor C Instructions Part C-August Variance Analysis During September of the current year, the controller was asked to perform variance analyses for August. The January operating data provided the standard prices, rates, tim produced during August, which was 250 more cases than planned at the beginning of the month. Actual data for August were as follows: Actual Direct Materials Quantity per Case Price per Unit Cream base $0.016 per oz 102 oz. 31 oz $0.32 per oz Natural oils Bottle (8-0z) 12.5 bottles $0.42 per bottle Actual Direct Labor Actual Direct Labor Rate Time per Case 19.50 min. $18.20 Mixing 5.60 min. 14.00 Filling $305.00 Actual variable overhead 1,600 cases Normal volume Check My Work 2 more Check My Work uses remaining Instructions Labor Rate Time per Case Mixing $18.20 19.50 min. Filling 14.00 5.60 min. Actual variable overhead $305.00 Normal volume 1,600 cases The prices of the materials were different from standard due to fluctuations in market prices. The standard quantity of materials used per case was an ideal standard. The M during the month, thus causing the actual labor rate to exceed standard. The Filling Department used a lower grade labor classification during the month, thus causing the ac Required-Part C: Determine and interpret the direct materials price and quantity variances for the three materials. 10. Determine and interpret the direct labor rate and time variances for the two departments. Round hours to the nearest tenth of an hour. 11. 12. Determine and interpret the factory overhead controllable variance. 13. Determine and interpret the factory overhead volume variance 14. Why are the standard direct labor and direct materials costs in the calculations for parts (10) and (11) based on the actual 1,500-case production volume rather than the planned 1,375 cases of production used in the budgets for parts (6) and (7)? Comprehensive Problem 5 Instructions Amount Descriptions Questions (Part A) Production Budget D Amount Descriptions Amount Descriptions-Part A Controllable variance Equipment depreciation Facility lease Supplies Utilities Volume variance Comprehensive Problem 5 Instructions Amount Descriptions Questions (Part A) Production Budget Direct Materia Questions (Part A) 1. Determine the fixed and yariable portion of the utility cost using the high-low me thod At High Point At Low Point Variable cost per unit Total fixed cost S Total cost S 2. Determine the contribution margin per case. 3. Determine the fixed costs per month, including the utility fixed cost from part (1). Total fixed costs: 1 2 4 5 6 cases 4. Determine the break-even number of cases per month. Comprehensive Problem 5 Instructions Amount Descriptions Questions (Part A) Production Budget Direct Materia Production Budget 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 Cengag Comprehensive Problem 5 Production Budget Direct Materials Purchases Budget Direct Amount Descriptions Questions (Part A) Instructions Direct Materials Purchases Budget 6. Prepare the August direct materials purchases budget. Enter all amounts as positive numbers. Genuine Spice Inc. Direct Materials Purchases Budget For the Month Ended August 31 Bottles (bottles) Total Natural Oils (oz.) Cream Base (oz.) Plus Less Direct materials to be purchased X