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Comprehensive Problem 5 Part A: Note: You must complete part A before completing parts B and C . Genuine Spice Inc. began operations on January
Comprehensive Problem
Part A:
Note: You must complete part A before completing parts B and C
Genuine Spice Inc. began operations on January of the current year. The company produces ounce bottles of hand and body lotion called Eternal Beauty. The lotion is sold wholesale in bottle cases for $ per case. There is a selling commission of $ per case. The January direct materials, direct labor, and factory overhead costs are as follows:
DIRECT MATERIALS
Products Cost
Behavior Units per Case Cost
per Unit Direct Materials
Cost per Case
Cream base Variable ozs. $ $
Natural oils Variable ozs.
Bottle oz Variable bottles
Total direct materials cost per case $
DIRECT LABOR
Department Cost
Behavior Time per Case Labor Rate
per Hour Direct Labor
Cost per Case
Mixing Variable min. $ $
Filling Variable min.
Total direct labor cost per case min. $
FACTORY OVERHEAD
Line Item Description Cost Behavior Total Cost
Utilities Mixed $
Facility lease Fixed
Equipment depreciation Fixed
Supplies Fixed
Total cost $
Part ABreakEven Analysis
The management of Genuine Spice Inc. wishes to determine the number of cases required to break even per month. The utilities cost, which is part of factory overhead, is a mixed cost. The following information was gathered from the first six months of operation regarding this cost:
Month Case Production Utility Total Cost
January $
February
March
April
May
June
Required:
Determine the fixed and variable portions of the utility cost using the highlow method. Round the per unit cost to the nearest cent.
Line Item Description At the High Point At the Low Point
Variable cost per unit $fill in the blank
$fill in the blank
Total fixed cost fill in the blank
fill in the blank
Total cost fill in the blank
fill in the blank
Determine the contribution margin per case. Round your answer to the nearest cent.
Contribution margin per case fill in the blank of $
Determine the fixed costs per month, including the utility fixed cost from part
Line Item Description Fixed Costs per Month
Utilities cost from part $fill in the blank
Facility lease fill in the blank
Equipment depreciation fill in the blank
Supplies fill in the blank
Total fixed costs $fill in the blank
Determine the breakeven number of cases per month.
fill in the blank of $
cases
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