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

Products Cost

Behavior Units per Case Cost

per Unit Direct Materials

Cost per Case

Cream base Variable $100$ ozs. $$0\mathrm{.}02$ $$2\mathrm{.}00$

Natural oils Variable $30$ ozs. $0\mathrm{.}309\mathrm{.}00$

Bottle $(8-$oz$.)$ Variable $12$ bottles $0\mathrm{.}506\mathrm{.}00$

Total direct materials cost per case $$17\mathrm{.}00$

DIRECT LABOR

Department Cost

Behavior Time per Case Labor Rate

per Hour Direct Labor

Cost per Case

Mixing Variable $20$ min. $$18\mathrm{.}00$ $$6\mathrm{.}00$

Filling Variable $5$ min. $14\mathrm{.}401\mathrm{.}20$

Total direct labor cost per case $25$ min. $$7\mathrm{.}20$

FACTORY OVERHEAD

Line Item Description Cost Behavior Total Cost

Utilities Mixed $$600$

Facility lease Fixed $14,000$

Equipment depreciation Fixed $4,300$

Supplies Fixed $660$

Total cost $$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:

Line Item Description Cases Cost

Estimated finished goods inventory, August $1300$ $$12,000$

Desired finished goods inventory, August $311757,000$

Materials Inventory:

Line Item Description Cream Base

$($ozs$.)$ Oils

$($ozs$.)$ Bottles

$($bottles$)$

Estimated materials inventory, August $1250290600$

Desired materials inventory, August $311,000360240$

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 $31$

Line Item Description Cases

fill in the blank $2$

fill in the blank $4$

fill in the blank $6$

fill in the blank $8$

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 $31$

Line Item Description Cream Base $($ozs$.)$ Natural Oils $($ozs$.)$ Bottles $($bottles$)$ Total

fill in the blank $12$

fill in the blank $13$

fill in the blank $14$

fill in the blank $16$

fill in the blank $17$

fill in the blank $18$

fill in the blank $20$

fill in the blank $21$

fill in the blank $22$

fill in the blank $24$

fill in the blank $25$

fill in the blank $26$

$fill in the blank $28$

$fill in the blank $29$

$fill in the blank $30$

$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 $31$

Line Item Description Mixing Filling Total

Hours required for production of:

fill in the blank $37$

fill in the blank $38$

$fill in the blank $40$

$fill in the blank $41$

$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 $31$

Line Item Description Fixed Variable Total

Factory overhead:

$fill in the blank $47$

$fill in the blank $48$

$fill in the blank $49$

fill in the blank $51$

fill in the blank $52$

fill in the blank $53$

fill in the blank $55$

fill in the blank $56$

fill in the blank $57$

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 $31$

Line Item Description Amount Amount Amount

$fill in the blank $66$

$fill in the blank $68$

$fill in the blank $70$

fill in the blank $72$

fill in the blank $74$

$fill in the blank $76$

fill in the blank $78$

fill in the blank $80$

fill in the blank $81$

fill in the blank $83$