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 Behavior Units per Case Cost per Unit Direct Materials Cost per Case Cream base Variable $0.02 $2.00 Natural oils Bottle (8-oz.) Variable Variable 30 ozs. 0.30 9.00 12 bottles 0.50 6.00 $17.00 DIRECT LABOR Direct Labor Cost Department Behavior Time per Case Labor Rate per Hour Cost per Case Mixing Variable 20 min. $18.00 $6.00 Filling Variable 5 min. 14.40 25 min. 1.20 $7.20 FACTORY OVERHEAD Cost Behavior Total Cost Utilities Mixed $600 Facility lease Fixed 14,000 Equipment depreciation Supplies Fixed 4,300 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 $0.016 per oz. Quantity per Case 102 ozs. Cream base Natural oils Bottle (8-oz.) $0.32 per oz. $0.42 per bottle Actual Direct Labor Rate 31 ozs. 12.5 bottles Actual Direct Labor Time per Case 19.50 min. Mixing Filling Actual variable overhead Normal volume $18.20 14.00 $305.00 1,600 cases 5.60 min. 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 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). Direct Materials Price Variance: Actual price Standard price Difference Actual quantity (units) Direct materials price variance Indicate if favorable or unfavorable Cream Base Natural Oils Bottles 0.016 0.320 0.420 0.02 x 0.3 X 0.5 x 0.004 X 0.02 0.08 x 153,000 ozs. 46,500 ozs. 18,750 btls. 612 X 930 1,500 X Favorable Unfavorable Favorable Enter the standard price to two decimal places. Direct Materials Quantity Variance: Cream Base Natural Oils Bottles Actual quantity Standard quantity 153,000 ozs. 150,000 X 46,500 18,750 btls. 45,000 X 18,000 X Difference 3,000 ozs. 1,500 ozs. 750 btls. Standard price Direct materials quantity 0.020 0.300 0.500 60 450 375 variance Indicate if favorable or unfavorable Unfavorable Unfavorable Unfavorable 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. Direct Labor Rate Variance: Actual rate Standard rate Difference Actual time (hours) Direct labor rate variance Indicate if favorable or unfavorable Mixing Department Filling Department 18.20 14.00 18.00 X 14.40 x 0.20 0.40 x 487.50 140.00 97 x 56 x Favorable Unfavorable Direct Labor Time Variance: Actual time (hours) Standard time (hours) Difference Standard rate Direct labor time variance Indicate if favorable or unfavorable Mixing Department 487.50 500.00 x 12.50 X 18.00 V 225.00 x Favorable Filling Department 140.00 125.00 X 15.00 14.40 216.00 Unfavorable 12. Determine and interpret the direct labor rate and time variances for the two departments. Actual variable overhead Variable overhead at standard cost Factory overhead controllable variance 305.00 300.00 X 5.00 Unfavorable Indicate if favorable or unfavorable 13. Determine and interpret the factory overhead volume variance. Round rate to four decimal places and round your final answer to two decimal places. Normal volume (cases) Actual volume (cases) 1,600 1,500 x Difference Fixed factory overhead rate 100 12.04 X Factory overhead volume variance 1,203.75 X Indicate if favorable or unfavorable Unfavorable 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 for the month. Thus, the standard cost must be based on the 1,500 units of actual production.