August Budgets

During July of the current year, the management of Natural Fragrance, Inc. asked the controller to prepare August manufacturing and income statement budgets. Demand was expected to be 1,300 cases at $80 per case for August. Inventory planning information is provided as follows:

Finished Goods Inventory:

Cases Cost

Estimated finished goods inventory, August 1, 2017 200 $6,000

Desired finished goods inventory, August 31, 2017 100 $3,000

Materials Inventory:

Cream Base Oils Bottles

(ozs.) (ozs.) (bottles)

Estimated materials inventory, August 1, 2017 200 240 500

Desired materials inventory, August 31, 2017 800 300 200

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.

Instructions

5. Prepare the August production budget.

6. Prepare the August direct materials purchases budget.

7. Prepare the August direct labor budget.

8. Prepare the August factory overhead budget.

9. Prepare the August budgeted income statement, including selling expenses.

11 A A A IU - ab X, X A E A E S E | AaBbc AaBbc AaBbc AaBbccl Aab T Normal 1 No Spac... Heading 1 Heading 2 Title l Font Paragraph Styles 8 = 1. Natural Fragrance, Inc. began operations on January 1, 2017. 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 $80 per case. There is a selling commission of $16 per case. The January direct materials, direct labor, and factory overhead cost are as follows. Direct Materials Cost Behavior Units per Case Cost Per Unit Direct Materials Cost per Case Cream base Natural oil Bottle (8-oz.) Variable Variable Variable 72 oz. 24 ozs $0.015 $0.250 $0.400 $1.08 $6.00 $4.80 $11.88 12 bottles Direct Labor Cost Behavior Time per Case Labor Rate per Hour Direct Labor Cost per Case Department Mixing Filling Variable Variable 16.8 min. 42 min 21.0 min $15.00 $12.00 $4.20 $0.84 $5.04 Factory Overhead Cost Behavior Total Cost Utilities Facility lease Equipment depreciation Supplies Mixed Fixed Fixed Fixed $ 230. $12,043 $ 3.600 $ 600 516 473 D. Focus B2 nglish (United States) 11 A A A IU - ab X, X A E A E S E | AaBbc AaBbc AaBbc AaBbccl Aab T Normal 1 No Spac... Heading 1 Heading 2 Title l Font Paragraph Styles 8 = 1. Natural Fragrance, Inc. began operations on January 1, 2017. 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 $80 per case. There is a selling commission of $16 per case. The January direct materials, direct labor, and factory overhead cost are as follows. Direct Materials Cost Behavior Units per Case Cost Per Unit Direct Materials Cost per Case Cream base Natural oil Bottle (8-oz.) Variable Variable Variable 72 oz. 24 ozs $0.015 $0.250 $0.400 $1.08 $6.00 $4.80 $11.88 12 bottles Direct Labor Cost Behavior Time per Case Labor Rate per Hour Direct Labor Cost per Case Department Mixing Filling Variable Variable 16.8 min. 42 min 21.0 min $15.00 $12.00 $4.20 $0.84 $5.04 Factory Overhead Cost Behavior Total Cost Utilities Facility lease Equipment depreciation Supplies Mixed Fixed Fixed Fixed $ 230. $12,043 $ 3.600 $ 600 516 473 D. Focus B2 nglish (United States)