Instructions 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 Cost per Case $0.02 $200 Cream base Variable 100 OZS 9.00 0.30 Natural oils Variable 30 OZS 050 12 bottles 600 Bottle (8-02) Variable $17.00 DIRECT LABOR Department Cost Behavior Time per Case Labor Rate per Hour Cost per Case DICCT LADUN 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 25 min. $7.20 FACTORY OVERHEAD Cost Behavior Total Cost Utilities Mixed 5600 Facility lease Fixed 14,000 Equipment depreciation Foced 4,300 Supplies Fixed 660 $19,560 Instructions The management of Genuine Spice Inc. wishes to determine the number of cases required to break even per month. The utilities cost, which is part of factor overhead, is a mixed cost. The following information was gathered from the first six months of operation regarding this cost Month 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 Part A: 1. Determine the fired and variable portions of the unity cost using the high-low method. Round your per un cost to wo decimal places 2. Determine the contribution margin per case Round your answer to two decimal places. 3. Determine the fixed costs per month, including the utility fixed cost from part (1) Refer to the Asts of Amount Descriptions for the exact wording of the answer choices for text entries 4 Determine the break-even number of cases per month structions 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 bud 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 300 Estimated finished goods inventory, August 1 Desired finished goods inventory, August 31 $12,000 7,000 175 Materials inventory Cream Base (ozs.) Oils Bottles (ozs.) (bottles) 290 600 250 Estimated materials inventory, August 1 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 Part B: 5. Prepare the August production budget 6. Prepare the August direct materials purchases budget 7. Prepare the August direct labor cost budget. Round the hours required for production to the nearest hour 8. Prepare the August factory overhead cost budget an amount box does not require an entry, leave a blank (Entries of zero (0) will be cleared automatically by CNOW) 9. Prepare the August budgeted income statement, including selling expenses Enter all amounts as positive numbers Part C-August Variance Analysis During September of the current year, the controller was asked to perform variance analyses for August The January operating data provided the standard prices, rates, times, and quantities per case. There were 1,500 actual cases produced during August, which was 250 rpore cases than planned at the beginning of the month. Actual data for August were as follows Actual Direct Materials Price per Unit Quantity per Case Cream base $0.016 per oz 102 025 Natural oils $0.32 per 2 31 ozs Bottle (8-oz) $0.42 per bottle 12.5 bottles Actual Direct Labor Rate Actual Direct Labor Time per Case Mixing $18.20 19.50 min Filling 14.00 5.60 min $305.00 Actual variable overhead Normal volume 1,600 cases The prices of the materials were different than standard due to fluctuations in market prices. The standard quantity of materials used per case was an ideal standard. The Moong Department used a higher grade labor classification during the month, thus causing the actual labor rate to exceed standard. The Filling Department used a lower grade labor classification during the month, thus causing the actual labor rate to be less than standard. Instrucions The prices of the materials were different than standard due to fluctuations in market prices. The standard quantity of materials used per case was an ideal standard. The Mixing Department used a higher grade labor classification during the month, thus causing the actual labor rate to exceed standard. The Filling Department used a lower grade labor classification during the month, thus causing the actual labor rate to be less than standard. Required Part: 10. Determine and interpret the direct materials price and quantity vartances for the three materials. Round your price values for Cream Base to three decimal places and Natural Oils & Bottles to two decimal places 11. Determine and interpret the direct labor rate and time variances for the two departments. Do not round hours. Round your answers to two decimal places 12. Determine and interpret the factory overhead controllable variance 13. Determine and interpret the factory overhead volume variance. Round rate to four decimal places and round your final answer to two decimal places 14. Why are the standard direct labor and direct materials costs in the calculations for parts (10) and (11) based on the actual 1.500-case production volume rather than the planned 1,250 cases of production used in the budgets for parts (6) and (7) "Negative amount should be indicated by the minus sign Enfer a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number