Genuine Spice Inc. began operations on January 1,2016. The company produces a hand and body lotion in an eight-ounce bottle 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 Behavion Variable Variable Units Direct Materials Cost per Unit $0.02 0.30 0.50 per Case 100 ozs. 30 ozs 12 bottles Cost per Case $2.00 9.00 6.00 $17,00 Cream base Natural oils Bottle (8-oz) Variable DIRECT LABOR Cost Behavior Variable Variable Time per Case 20 mn Labor Rate per Hour $18.00 14.40 Direct Labor Cost per Case 6.00 1.20 $7.20 Department Mixing Filling 25 min. FACTORY OVERHEAD Cost Behavior Total Cost $600 14,000 4,300 660 S19,560 Utilities Facility lease Equipment depreciation Supplies Mixed Fixed Fixed Fixed 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 300 $12,000 75 7,000 Estimated finished goods inventory Desired finished goods inventory, August 31, 2016 , August 1, 2016 Materials Inventory Cream Base Oils Bottles (ozs.) 250 1,000 (ozs.) (bottles) 290 360 Estimated materials inventory, August1, 2016 Desired materials inventory, August 31, 2016 600 240 There was negligible work in process inventory assumed for either the beginning or end ofthe 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, 2016 Cases Expected cases to be sold lus desired ending inventory otal estimated beginning inventory otal units to be produced 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, 2016 Cream Base (ozs Natural Oils (ozs Bottles (bottles Total nits required for roduction lus desired ending nventory ess estimated eginning inventory irect materials to be urchased nit price otal direct materials o be purchased 7. Prepare the August direct labor budget. For hours required, round to nearest whole hour. For hourly rate, enter to the nearest cent, if required. Genuine Spice Ine. Direct Labor Budget For the Month Ended August 31,2016 Mixin Fillin Hours required for production of: land and body lotion lourly rate otal direct labor cost Total
