Question
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
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:
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Part BAugust 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:
| Cream Base (ozs.) | Oils (ozs.) | Bottles (bottles) | |
| Estimated materials inventory, August 1 | 250 | 290 | 600 |
| Desired materials inventory, August 31 | 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.
| Genuine Spice Inc. Production Budget For the Month Ended August 31 | |
|---|---|
| Cases | |
| Expected cases to be sold | fill in the blank 2 |
| Desired ending inventory | fill in the blank 4 |
| Total units available | fill in the blank 6 |
| Estimated beginning inventory | fill in the blank 8 |
| Total units to be produced | fill in the blank 10 |
6. Prepare the August direct materials purchases budget. Enter the unit price to the nearest cent.
| Genuine Spice Inc. Direct Materials Purchases Budget For the Month Ended August 31 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Cream Base (ozs.) | Natural Oils (ozs.) | Bottles (bottles) | Total | ||||||||
| Units required for production | fill in the blank 12 | fill in the blank 13 | fill in the blank 14 | ||||||||
| Desired ending inventory | fill in the blank 16 | fill in the blank 17 | fill in the blank 18 | ||||||||
| Estimated beginning inventory | fill in the blank 20 | fill in the blank 21 | fill in the blank 22 | ||||||||
| Direct materials to be purchased | fill in the blank 24 | fill in the blank 25 | fill in the blank 26 | ||||||||
| Unit price | $fill in the blank 28 | $fill in the blank 29 | $fill in the blank 30 | ||||||||
| Total direct materials to be purchased | $fill in the blank 32 | $fill in the blank 33 | $fill in the blank 34 | $fill in the blank 35 | |||||||
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 | ||||||
|---|---|---|---|---|---|---|
| Mixing | Filling | Total | ||||
| Hours required for production of: | ||||||
| Hand and body lotion | fill in the blank 37 | fill in the blank 38 | ||||
| Hourly rate | $fill in the blank 40 | $fill in the blank 41 | ||||
| Total direct labor cost | $fill in the blank 43 | $fill in the blank 44 | $fill in the blank 45 | |||
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 | ||||||
|---|---|---|---|---|---|---|
| Fixed | Variable | Total | ||||
| Factory overhead: | ||||||
| Utilities | $fill in the blank 47 | $fill in the blank 48 | $fill in the blank 49 | |||
| Facility lease | fill in the blank 51 | fill in the blank 52 | fill in the blank 53 | |||
| Equipment depreciation | fill in the blank 55 | fill in the blank 56 | fill in the blank 57 | |||
| Supplies | fill in the blank 59 | fill in the blank 60 | fill in the blank 61 | |||
| Total | $fill in the blank 62 | $fill in the blank 63 | $fill in the blank 64 | |||
9. Prepare the August budgeted income statement, including selling expenses.
| Genuine Spice Inc. Budgeted Income Statement For the Month Ended August 31 | ||||
|---|---|---|---|---|
| Sales | $fill in the blank 66 | |||
| Finished goods inventory, August 1 | $fill in the blank 68 | |||
| Direct materials inventory, August 1 | $fill in the blank 70 | |||
| Direct materials purchases | fill in the blank 72 | |||
| Direct materials inventory, August 31 | fill in the blank 74 | |||
| Cost of direct materials for production | $fill in the blank 76 | |||
| Direct labor | fill in the blank 78 | |||
| Factory overhead | fill in the blank 80 | fill in the blank 81 | ||
| Finished goods inventory, August 31 | fill in the blank 83 | |||
| Cost of goods sold | fill in the blank 85 | |||
| Gross profit | $fill in the blank 87 | |||
| Selling expenses | fill in the blank 89 | |||
| Operating income | $fill in the blank 91 | |||
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Economics In Minutes 200 Key Concepts Explained In An Instant
Authors: Niall Kishtainy
1st Edition
1782066470, 9781782066477
