1. 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 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 ABreak-Even Analysis

   The management of Genuine Spice Inc. wants to determine the number of cases required to The level of business operations at which revenues and expired costs are equal.break even per month. The utilities cost, which is part of factory overhead, is a A cost with both variable and fixed characteristics, sometimes called a semivariable or semifixed cost.mixed cost. The following information was gathered from the first six months of operation regarding this cost:

   	Case Production	Utility Total Cost
   January	500	$600
   February	800	660
   March	1,200	740
   April	1,100	720
   May	950	690
   June	1,025	705

   Required:

   1. Determine the Costs that tend to remain the same in amount, regardless of variations in the level of activity.fixed and Costs that vary in total dollar amount as the level of activity changes.variable portion of the utility cost using the A technique that uses the highest and lowest total costs as a basis for estimating the variable cost per unit and the fixed cost component of a mixed cost.high-low method. Round the per unit cost to the nearest cent.

   	At High Point	At Low Point
   Variable cost per unit	$	$
   Total fixed cost	$	$
   Total cost	$	$

   2. Determine the Sales less variable costs and variable selling and administrative expenses.contribution margin per case. Enter your answer to the nearest cent.

   Contribution margin per case $

   3. Determine the fixed costs per month, including the utility fixed cost from part (1).

   Utilities cost (from part 1)	$
   Facility lease
   Equipment depreciation
   Supplies
   Total fixed costs	$

   4. Determine the break-even number of cases per month. cases