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

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 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:

Products Actual Direct Materials

Price per Unit Actual Direct Materials

Quantity per Case

Cream base $$0\mathrm{.}016$ per oz$.102$ ozs.

Natural oils $$0\mathrm{.}32$ per oz$.31$ ozs.

Bottle $(8-$oz$.)$ $$0\mathrm{.}42$ per bottle $12\mathrm{.}5$ bottles

Line Item Description Actual Direct Labor

Rate Actual Direct Labor

Time per Case

Mixing $$18\mathrm{.}2019\mathrm{.}50$ min.

Filling $14\mathrm{.}005\mathrm{.}60$ min.

Actual variable overhead $$305\mathrm{.}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.

$11.$ 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:

Line Item Description Mixing Department Filling Department

Actual rate $fill in the blank $37$ $fill in the blank $38$

Standard rate fill in the blank $39$ fill in the blank $40$

Difference $fill in the blank $41$ $fill in the blank $42$

Actual time $($hours$)\backslash$times fill in the blank $43\backslash$times fill in the blank $44$

Direct labor rate variance $fill in the blank $45$ $fill in the blank $46$

Indicate if favorable or unfavorable

Direct Labor Time Variance:

Line Item Description Mixing Department Filling Department

Actual time $($hours$)$ fill in the blank $49$ fill in the blank $50$

Standard time $($hours$)$ fill in the blank $51$ fill in the blank $52$

Difference fill in the blank $53$ fill in the blank $54$

Standard rate $\backslash$times $fill in the blank $55\backslash$times $fill in the blank $56$

Direct labor time variance $fill in the blank $57$ $fill in the blank $58$

Indicate if favorable or unfavorable

$12.$ Determine and interpret the direct labor rate and time variances for the two departments.

Line Item Description Amount

Actual variable overhead $fill in the blank $61$

Variable overhead at standard cost fill in the blank $62$

Factory overhead controllable variance $fill in the blank $63$

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.

Line Item Description Amount

Normal volume $($cases$)$ fill in the blank $65$

Actual volume $($cases$)$ fill in the blank $66$

Difference fill in the blank $67$

Fixed factory overhead rate $fill in the blank $68$

Factory overhead volume variance $fill in the blank $69$

Indicate if favorable or unfavorable

$14.$ The production volume of fill in the blank $1$ of $3$ cases was planned at the beginning of August. The variances compare the actual cost and the standard cost of fill in the blank $2$ of $3$

for the month. Thus, the standard cost must be based on the fill in the blank $3$ of $3$ units of actual production.