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 BAugust Budgets

During July of the current year, the management of 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:

	Case	Cost
Estimated finished goods inventory, August 1	300	$12,000
Desired finished goods inventory, August 31	175	7,000

Materials Inventory:

	Cream Base (ozs.)	Oils (ozs.)	Bottles (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
Expected cases to be sold	fill in the blank 1
Plus desired ending inventory	fill in the blank 2
Total cases required	fill in the blank 3
Less estimated beginning inventory	fill in the blank 4
Total cases to be produced	fill in the blank 5

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
	Direct Materials
	Cream Base (ozs.)			Natural Oils (ozs.)			Bottles (bottles)			Total
Units required for production	fill in the blank 6			fill in the blank 7			fill in the blank 8
Plus desired ending inventory	fill in the blank 9			fill in the blank 10			fill in the blank 11
Less estimated beginning inventory	fill in the blank 12			fill in the blank 13			fill in the blank 14
Direct materials to be purchased	fill in the blank 15			fill in the blank 16			fill in the blank 17
Unit price	$fill in the blank 18			$fill in the blank 19			$fill in the blank 20
Total direct materials to be purchased	$fill in the blank 21			$fill in the blank 22			$fill in the blank 23			$fill in the blank 24

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
	Mixing		Filling		Total
Hours required for production:
Hand and body lotion	fill in the blank 25		fill in the blank 26
Hourly rate	$fill in the blank 27		$fill in the blank 28
Total direct labor cost	$fill in the blank 29		$fill in the blank 30		$fill in the blank 31

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
Factory overhead:	Fixed		Variable		Total
Utilities	$fill in the blank 32		$fill in the blank 33		$fill in the blank 34
Facility lease	fill in the blank 35		fill in the blank 36		fill in the blank 37
Equipment depreciation	fill in the blank 38		fill in the blank 39		fill in the blank 40
Supplies	fill in the blank 41		fill in the blank 42		fill in the blank 43
Total factory overhead cost	$fill in the blank 44		$fill in the blank 45		$fill in the blank 46

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
Revenue from sales				$fill in the blank 47
Finished goods inventory, August 1			$fill in the blank 48
Direct Materials:
	Direct materials inventory, August 1	$fill in the blank 49
	Direct materials purchases	fill in the blank 50
	Less direct materials inventory, August 31	fill in the blank 51
	Cost of direct materials placed in production	$fill in the blank 52
	Direct labor	fill in the blank 53
	Factory overhead	fill in the blank 54
Cost of goods manufactured			fill in the blank 55
Cost of finished goods available for sale			$fill in the blank 56
Less finished goods inventory, August 31			fill in the blank 57
Cost of goods sold				fill in the blank 58
Gross profit				$fill in the blank 59
Selling expenses				fill in the blank 60
Income before income tax				$fill in the blank 61