1. 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 eight- 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 Behavior	Units per Case	Cost per Unit	Direct Materials Cost 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 CAugust 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 Price per Unit		Actual Direct Materials 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 from 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:

   10. Determine and interpret 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). Enter all amounts as positive numbers.

   Direct Materials Price Variance:
   	Cream Base		Natural Oils		Bottles
   Actual price	$fill in the blank 1		$fill in the blank 2		$fill in the blank 3
   Standard price	fill in the blank 4		fill in the blank 5		fill in the blank 6
   Difference	$fill in the blank 7		$fill in the blank 8		$fill in the blank 9
   Actual quantity (units)	Xfill in the blank 10	ozs.	Xfill in the blank 11	ozs.	Xfill in the blank 12	btls.
   Direct materials price variance	$fill in the blank 13		$fill in the blank 14		$fill in the blank 15
   Indicate if favorable or unfavorable

   Enter the standard price to two decimal places.

   Direct Materials Quantity Variance:
   	Cream Base		Natural Oils		Bottles
   Actual quantity	fill in the blank 19	ozs.	fill in the blank 20	ozs.	fill in the blank 21	btls.
   Standard quantity	fill in the blank 22		fill in the blank 23		fill in the blank 24
   Difference	fill in the blank 25	ozs.	fill in the blank 26	ozs.	fill in the blank 27	btls.
   Standard price	X $fill in the blank 28		X $fill in the blank 29		X $fill in the blank 30
   Direct materials quantity variance	$fill in the blank 31		$fill in the blank 32		$fill in the blank 33
   Indicate if favorable or unfavorable

   The fluctuation in..................... caused the direct material price variances. All the quantity variances were.....................(unfavorable/favorable) indicating ..............

   11. Determine and interpret the direct labor rate and time variances for the two departments. Do not round hours. Enter the costs in dollars and cents. Enter all amounts as positive numbers.

   Direct Labor Rate Variance:
   	Mixing Department		Filling Department
   Actual rate	$fill in the blank 40		$fill in the blank 41
   Standard rate	fill in the blank 42		fill in the blank 43
   Difference	$fill in the blank 44		$fill in the blank 45
   Actual time (hours)	Xfill in the blank 46		Xfill in the blank 47
   Direct labor rate variance	$fill in the blank 48		$fill in the blank 49
   Indicate if favorable or unfavorable

   Direct Labor Time Variance:
   	Mixing Department		Filling Department
   Actual time (hours)	fill in the blank 52		fill in the blank 53
   Standard time (hours)	fill in the blank 54		fill in the blank 55
   Difference	fill in the blank 56		fill in the blank 57
   Standard rate	X $fill in the blank 58		X $fill in the blank 59
   Direct labor time variance	$fill in the blank 60		$fill in the blank 61
   Indicate if favorable or unfavorable

   The change in the............... caused the labor rate variances. This change....................... have been responsible for the direct labor time variance.

   12. Determine and interpret the factory overhead controllable variance. Enter all amounts as positive numbers.

   Actual variable overhead	$fill in the blank 66
   Variable overhead at standard cost	fill in the blank 67
   Factory overhead controllable variance	$fill in the blank 68
   Indicate if favorable or unfavorable

   The factory overhead controllable variance was caused by the variance in..........................? .

   13. Determine and interpret the factory overhead volume variance. When determining the fixed factory overhead rate, round the factory overhead rate to two decimal places and the factory overhead volume variance to whole dollars. Enter all amounts as positive numbers.

   Normal volume (cases)	fill in the blank 71
   Actual volume (cases)	fill in the blank 72
   Difference	fill in the blank 73
   Fixed factory overhead rate	$fill in the blank 74
   Factory overhead volume variance	$fill in the blank 75
   Indicate if favorable or unfavorable

   The volume variance indicates the cost of............... .

   14. Why are the standard direct labor and direct materials costs in the calculations for parts (10) and (11) based on the actual 1,500-case production volume rather than the planned 1,375 cases of production used in the budgets for parts (6) and (7)?...............