Comprehensive Problem 5 Part B: Note: This section is a continuation from Part A of the comprehensive problem. Be sure you have completed Part A before attempting Part B. You may have to refer back to data presented in Part A and use answers from Part A when completing this section. Genuine Spice Inc. began operations on January 1 of the current year. The company produces 8-ounce bottles of hand and body lotion 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 January direct materials, direct labor, and factory overhead costs are as follows: DIRECT MATERIALS Cost Units Cream base Natural oils Bottle (8-oz.) Variable 12 bottles Direct Materials Behavior per Case per Unit Cost per Case Variable 100 ozs. $0.02 Variable 30 ozs. 0.30 Cost $2.00 9.00 0.50 6.00 $17.00 DIRECT LABOR Cost Time Department Mixing Filling Labor Rate Direct Labor Behavior per Case per Hour Cost per Case Variable 20 min. Variable $18.00 14.40 $6.00 25 min. 1.20 $7.20 FACTORY OVERHEAD Cost Behavior Total Cost Utilities Mixed Facility lease Fixed $600 14,000 Equipment depreciation Supplies Fixed Fixed 4,300 660 $19,560 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 expected to be 1,500 cases at $100 per case for August. 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: Units required for production Desired ending inventory Estimated beginning inventory Genuine Spice Inc. Direct Materials Purchases Budget For the Month Ended August 31 Cream Base (ozs.) Natural Oils (ozs.) Bottles (bottles) Total 137,500 41,250 16,500 1,000 360 240 250 290 600 Direct materials to be purchased 138,250 41,320 16,140 $ $ $ Unit price 0.02 0.3 0.5 Total direct materials to be purchased $ 2,765 $ $ $ 12,396 8,070 23,312 7. Prepare the August direct labor cost budget. For hours required, round to nearest whole hour. For hourly rate, enter to the nearest cent, if required. Genuine Spice Inc. Direct Labor Cost Budget For the Month Ended August 31 Hours required for production of: Mixing Filling Total Total direct labor cost Hourly rate Total direct labor cost 458.33 $ 115 $ 18 14 $ $ $ 8,250 1,650 9,900 8. Prepare the August factory overhead cost budget. If an amount box does not require an entry, leave it blank. Genuine Spice Inc. Factory Overhead Cost Budget For the Month Ended August 31 Factory overhead: Utilities Fixed Variable Total $ $ $ 500 275 775 14,000 0 14,000 Equipment depreciation. 4,300 0 4,300 Estimated materials inventory, August 1 Desired materials inventory, August 31 Cream Base (ozs.) 250 1,000 Oils Bottles (ozs.) (bottles) Facility lease 290 360 600 240 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. Supplies Total Required: 5. Prepare the August production budget. Enter all amounts as positive numbers. Genuine Spice Inc. Production Budget For the Month Ended August 31 Cases Expected cases to be sold 1,500 Desired ending inventory 175 Desired ending inventory Estimated beginning inventory 300 Total units to be produced 1,375 660 0 660 $ $ $ 19,460 275 19,735 9. Prepare the August budgeted income statement, including selling expenses. Enter all amounts as positive numbers. Genuine Spice Inc. Budgeted Income Statement For the Month Ended August 31 Selling expenses Sales $ $ 12,000 $ Finished goods inventory, August 1 192 Direct materials purchases 23,231 Cost of direct materials for production 248 $