eBook Comprehensive Problem 5 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 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 $0.02 Direct Materials Cost per Case Variable 100 OZ Cream base Natural oils $2.00 9.00 Variable 30 OZ 0.30 Bottle (8.02) Variable 6.00 12 bottles 0.50 $12.00 DIRECT LABOR Department Cost Behavior Time per Case Labor Rate per Hour $18.00 Direct Labor Cost per Case $6.00 Moring Variable 20 min 5 Filling Variable 14.40 1.20 25 min 57.20 FACTORY OVERHEAD Cnst Ranvin Totalcach Previous Emniatructor Submit Assignment for Grading FACTORY OVERHEAD Cost Behavior Total Cost Mixed 5600 Fixed 14,000 Utilities Facility lease Equipment depreciation Supplies Fixed 4,300 Fixed 660 319,560 Part B-August 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 Cases Cost Estimated finished goods inventory, August 1 300 $12,000 Desired finished goods inventory, August 31 175 7,000 Materials Inventory Cream Base (ozs.) 250 Oils (ors.) 290 Bottles (bottles) 600 Estimated materials inventory, August 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 Genuine Spice Inc. Production Budget For the Month Ended August 31 Cases Expected cases to be sold 1,500 175 Desired ending inventory Total units available 1,675 -300 Estimated beginning inventory Total units to be produced 1,375 6. Prepare the August direct materials purchases budget Enter the unit price to the nearest cent. Genuine Spice Inc. Direct Materials Purchases Budget For the Month Ended August 31 Cream Base (ozs.) Natural Oils (ozs.) Bottles (bottles) Total Unit De 7. Prepare the August direct labor cost budget. For hours required, round to nearest whole hour. For hourly rate, enter to the nearest cent, required. Genuine Spice Inc. Direct Labor Cost Budget For the Month Ended August 31 Mixing Filling Total Hours required for production of 3. 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. Genuine Spice Inc. Budgeted Income Statement For the Month Ended August 31
