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 Units Cost Direct Materials Behavior per Case per Unit 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 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 Price per Unit Actual Direct Materials Quantity per Case Cream base 102 ozs. $0.016 per oz. $0.32 per oz. Natural oils 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 Standard price Difference Actual quantity (units) OZS. OZS. btls. Direct materials price variance Indicate if favorable or unfavorable Enter the standard price to two decimal places. Direct Materials Quantity Variance: Cream Base Natural Oils Bottles Actual quantity OZS. ozs. btls. Standard quantity Difference ozs. OZS. ozs. btls. Standard price X $ Direct materials quantity variance $ Indicate if favorable or unfavorable The fluctuation in caused the direct material price variances. All the quantity variances were 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. 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 Standard rate Difference A X Actual time (hours) Direct labor rate variance ta Indicate if favorable or unfavorable Direct Labor Time Variance: Mixing Department Filling Department Actual time (hours) Standard time (hours) Difference Standard rate Direct labor time variance $ Indicate if favorable or unfavorable caused the labor rate variances. This change have been responsible for the direct The change in the labor time variance. 12. Determine and interpret the factory overhead controllable variance. Enter all amounts as positive numbers. Actual variable overhead Variable overhead at standard cost Factory overhead controllable variance $ 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) Actual volume (cases) Difference Fixed factory overhead rate Factory overhead volume variance $ 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)? 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 Units Cost Direct Materials Behavior per Case per Unit 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 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 Price per Unit Actual Direct Materials Quantity per Case Cream base 102 ozs. $0.016 per oz. $0.32 per oz. Natural oils 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 Standard price Difference Actual quantity (units) OZS. OZS. btls. Direct materials price variance Indicate if favorable or unfavorable Enter the standard price to two decimal places. Direct Materials Quantity Variance: Cream Base Natural Oils Bottles Actual quantity OZS. ozs. btls. Standard quantity Difference ozs. OZS. ozs. btls. Standard price X $ Direct materials quantity variance $ Indicate if favorable or unfavorable The fluctuation in caused the direct material price variances. All the quantity variances were 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. 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 Standard rate Difference A X Actual time (hours) Direct labor rate variance ta Indicate if favorable or unfavorable Direct Labor Time Variance: Mixing Department Filling Department Actual time (hours) Standard time (hours) Difference Standard rate Direct labor time variance $ Indicate if favorable or unfavorable caused the labor rate variances. This change have been responsible for the direct The change in the labor time variance. 12. Determine and interpret the factory overhead controllable variance. Enter all amounts as positive numbers. Actual variable overhead Variable overhead at standard cost Factory overhead controllable variance $ 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) Actual volume (cases) Difference Fixed factory overhead rate Factory overhead volume variance $ 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)