Comprehensive Problems Part B: Note: This section is a continuation from Part A of the comprehensive problem, Be sure you have completed Part A before attempting Part B. You may have to refer back to data presented in Part A and use answers from Part A 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 seling commission of $20 per case. The January direct materials, direct labor, and factory overhead costs are as follows: DIRECT MATERIALS Direct Cost Units Cost Materials Behavior per Case Cost per Case Cream base Variable 100 oz. $0.02 Natural oils Variable 30 OZ. 0.30 9.00 Bottle (8-02.) Variable 12 bottles 0.50 $17.00 per Unit $2.00 6.00 DIRECT LABOR Department Cost Behavior Time per Case Labor Rate per Hour Direct Labor Cost per Case $6.00 Mixing Variable $18.00 20 min 5 Filling Variable 14.40 1.20 25 min $7:20 FACTORY OVERHEAD Cost Behavior Total Cost Utilities $600 Facility lease Equipment depreciation Supplies Mixed Fixed Fixed Fixed 14,000 4,300 660 $19,560 Part B-August Budgets During July of the current year, the management of Genuine Spice Inc. asked the controller to prepare August manufacturin and income statement budgets. Demand was expected to be 1,500 cases at $100 per case for August. Inventory planning information is provided as follows: Finished Goods Inventory: Part B - August Budgets During July of the current years the management Genuine Spice Inc. asked the controller to prepare August manufacturing and income statement budgets. Demand was expected to be 1,500 cases at $100 per case for August. Inventory planning information is provided as follows: Finished Goods Inventory: Cost Estimated finished goods inventory, August 1 300 $12,000 Desired finished goods inventory, August 31 175 7.000 Cases Materials Inventory: Cream Base Oils Bottles (ozs.) (ozs.) (bottles) Estimated materials inventory, August 1 250 290 600 Desired materials inventory, August 31 1,000 360 240 There was negligible work in process inventory assumed for either the beginning or end of the month; thus, none was assumed. In addition, there was no change in the cost per unit or estimated units per case operating data from January, Required: 5. Prepare the August production budget. Enter all amounts as positive numbers Genuine Spice Inc. Production Budget For the Month Ended August 31 Cases 6. Prepare the August direct materials purchases budget. Enter the unit price to the nearest cent. Enter all amounts as positive numbers Genuine Spice Inc. Direct Materials Purchases Budget For the Month Ended August 31 Cream Base (ozs.) Natural Oils (ozs.) Bottles (bottles) Total 6. Prepare the August direct materials purchases budget. Enter the unit price to the nearest cent. Enter all amounts as positive numbers Genuine Spice Inc. Direct Materials Purchases Budget For the Month Ended August 31 Cream Base (ozs.) Natural Oils (ozs.) Botties (bottles) Total 7. Prepare the August direct labor cost budget. For hours required, round to nearest whole hour. For hourly rate, enter to the nearest cent, if required Genuine Spice Inc. Direct Labor Cost Budget For the Month Ended August 31 Hours required for production of: Mixing Filling Total 8. Prepare the August factory overhead cost budget. If an amount box does not require an entry, leave it blank. Genuine Spice Inc. Factory Overhead Cost Budget For the Month Ended August 31 Fixed Variable Total Factory overhead: Total 9. Prepare the August budgeted income statement, including selling expenses. Enter all amounts as positive numbers. Genuine Spice Inc. Budgeted Income Statement For the Month Ended August 31
