Comprehensive Problem 5 Part C: Note: This section is a continuation from Parts A and B of the comprehensive problem. Be sure you have completed Parts A and B before attempting Part C. You may have to refer back to data presented in Parts A and B as well as use answers from those parts 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 Cost per Unit Direct Materials Cost per Case Behavior per Case Cream base Variable 100 ozs. $0.02 $2.00 Natural oils Variable 30 Ozs. 0.30 9.00 Bottle (8-oz.) Variable 12 bottles 0.50 6.00 $17.00 DIRECT LABOR Department Cost Behavior Time per Case Labor Rate per Hour Direct Labor Cost per Case Mixing Variable 20 min. $18.00 $6.00 Filling Variable 5 14.40 1.20 25 min. $7.20 FACTORY OVERHEAD Cost Behavior Total Cost Utilities Mixed $600 Facility lease Fixed 14,000 Equipment depreciation Fixed 4,300 Supplies Fixed 660 $19,560 Part C-August Variance Analysis During September of the current year, the controller was asked to perform variance analyses for August. The January operating data provided the standard prices, rates, times, and quantities per case. There were 1,500 actual cases produced during August, which was 250 more cases than planned at the beginning of the month. Actual data for August were as follows: Actual Direct Materials Actual Direct Materials Price per Unit Quantity per Case Cream base $0.016 per oz. 102 ozs. Natural oils $0.32 per oz. 31 ozs. Bottle (8-oz.) $0.42 per bottle 12.5 bottles Actual Direct Labor Rate Actual Direct Labor Time per Case Mixing $18.20 19.50 min. Filling 14.00 5.60 min. Actual variable overhead $305.00 Normal volume 1,600 cases The prices of the materials were different than standard due to fluctuations in market prices. The standard quantity of materials used per case was an ideal standard. The Mixing Department used a higher grade labor classification during the month, thus causing the actual labor rate to exceed standard. The Filling Department used a lower grade labor classification during the month, thus causing the actual labor rate to be less than standard. Required: Enter subtracted amounts with minus sign. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. 10. Determine the direct materials price and quantity variances for the three materials. Enter the costs in dollars and cents (carried to three decimal places when required). Direct Materials Price Variance: Cream Base Natural Oils Bottles Actual price $ 0.016 $ 0.32 $ 0.42 Standard price 0.020 X 0.30 X 0.50 X Difference -0.004 $ 0.02 $ -0.08 Actual quantity (units) X 153,000 ozs. X 46,500 ozs. X 18,750 btls. Direct materials price variance -612 $ 930 $ -1,500 Indicate if favorable or unfavorable Favorable Unfavorable Favorable Enter the standard price to two decimal places. Direct Materials Quantity Variance: Cream Base Natural Oils Bottles Actual quantity 153,000 ozs. 46,500 ozs. 18,750 btls. Standard quantity 1,500,00 X 450,000 X 18,000 X Difference 3,000 ozs. 1,500 ozs. 750 btls. Standard price X 0.02 X 0.3 X 0.5 Direct materials quantity variance 60 450 $ 375 Indicate if favorable or unfavorable Unfavorable Unfavorable Unfavorable 11. Determine the direct labor rate and time variances for the two departments. Do not round hours. Enter the costs in dollars and cents. Direct Labor Rate Variance: Mixing Department Filling Department Actual rate 18.2 14 Standard rate 18.00 X 14.40 X Difference $ 0.2 $ -0.4 Actual time (hours) X 487.5 X 140.0 Direct labor rate variance $ 97.5 -56 Indicate if favorable or unfavorable Unfavorable Favorable Direct Labor Time Variance: Mixing Department Filling Department Actual time (hours) 487.5 140.0 Standard time (hours) 500 X 150 X Difference -12.5 15.0 Standard rate X $ 18 X $ 14.4 Direct labor time variance $ -225 216 Indicate if favorable or unfavorable Favorable Unfavorable 12. Determine the factory overhead controllable variance. Actual variable overhead $ 305 Variable overhead at standard cost 300 x Factory overhead controllable variance $ 5 Indicate if favorable or unfavorable Unfavorable 13. Determine the factory overhead volume variance. Round rate to four decimal places and round your final answer to two decimal places. Normal volume (cases) 1,600 Actual volume (cases) 1,500 X Difference 100 Fixed factory overhead rate 12.1625 X 13. Determine the factory overhead volume variance. Round rate to four decimal places and round your final answer to two decimal places. Normal volume (cases) 1,600 Actual volume (cases) 1,500 x Difference 100 Fixed factory overhead rate $ 12.1625 x Factory overhead volume variance $ 1,216.25 x Indicate if favorable or unfavorable Unfavorable for the month. Thus, the 14. The production volume of 1,250 X cases was planned at the beginning of August. The variances compare the actual cost and the standard cost of actual production standard cost must be based on the units of actual production