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	Cost per Case
Cream base	Variable	100 oz.	$0.02	$ 2.00
Natural oils	Variable	30 oz.	0.30	9.00
Bottle (8-oz.)	Variable	12 bottles	0.50	6.00
You are in Column DIRECT MATERIALS	You are in Column DIRECT MATERIALS Cost Behavior	You are in Column DIRECT MATERIALS Units per Case	You are in Column DIRECT MATERIALS Cost per Unit	$17.00You are in Column DIRECT MATERIALS Cost per Case

DIRECT LABOR
Department	Cost Behavior	Time per Case	Labor Rate per Hour	Cost per Case
Mixing	Variable	20 min.	$18.00	$6.00
Filling	Variable	5	14.40	1.20
You are in Column DIRECT LABOR Department	You are in Column DIRECT LABOR Cost Behavior	25 min.You are in Column DIRECT LABOR Time per Case	You are in Column DIRECT LABOR Labor Rate per Hour	$7.20You are in Column DIRECT LABOR Cost per Case

FACTORY OVERHEAD
	Cost Behavior	Total Cost
Utilities	Mixed	$600
Facility lease	Fixed	14,000
Equipment depreciation	Fixed	4,300
Supplies	Fixed	660
You are in Column FACTORY OVERHEAD	You are in Column FACTORY OVERHEAD Cost Behavior	$19,560You are in Column FACTORY OVERHEAD Total Cost

	Case Production	Utility Total Cost
January	500	$600
February	800	660
March	1,200	740
April	1,100	720
May	950	690
June	You are in Column Case Production1,025	You are in Column Utility Total Cost705

Finished Goods Inventory:

	Cases	Cost
Estimated finished goods inventory, August 1	300	$12,000
Desired finished goods inventory, August 31	You are in Column Cases175	You are in Column Cost7,000

Materials Inventory:

	Cream Base	Oils	Bottles
	(oz.)	(oz.)	(bottles)
Estimated materials inventory, August 1	250	290	600
You are in Column (oz.)Desired materials inventory, August 31	You are in Column Cream Base (oz.)1,000	You are in Column Oils (bottles)360	You are in Column Bottles240

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.

	Actual Direct Materials
	Price per Unit	Quantity per Case
Cream base	$0.016 per oz.	102 oz.
Natural oils	$0.32 per oz.	31 oz.
You are in Column Price per UnitBottle (8-oz.)	You are in Column Actual Direct Materials Quantity per Case$0.42 per bottle	You are in Column Actual Direct Materials12.5 bottles

	Actual Direct	Actual Direct Labor
	Labor Rate	Time per Case
Mixing	$18.20	19.50 min.
You are in Column Labor RateFilling	You are in Column Actual Direct Time per Case14.00	You are in Column Actual Direct Labor5.60 min.

Actual variable overhead	$305.00
Normal volume	1,600 cases

Genuine Spice Inc.
Budgeted Income Statement
For the Month Ended August 31
Revenue from sales
Finished goods inventory, August 1
Direct materials:
Direct materials inventory, August 1
Direct materials purchases
Cost of direct materials available for use
Less direct materials inventory, August 31
Cost of direct materials placed in production
Direct labor
Factory overhead
Cost of goods manufactured
Cost of finished goods available for sale
Less finished goods inventory, August 31
Cost of goods sold
Gross profit
Selling expenses
Income before income tax