make sure everything is right

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 Units Cost Cost Behavior Direct Materials Cost per Case per Case per Unit Cream base Variable 100 Ozs. $0.02 $2.00 Variable 30 OZS 0.30 9.00 Natural oils Bottle (8-oz.) Variable 12 bottles 0.50 6.00 $17.00 DIRECT LABOR Time Labor Rate Department Cost Behavior Direct Labor Cost per Case per Case per Hour 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 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 300 $12,000 Estimated finished goods inventory, August 1 Desired finished goods inventory, August 31 175 7,000 Materials Inventory: Bottles Cream Base (ozs.) Oils (ozs.) (bottles) 250 290 600 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 9. Prepare the August budgeted Income statement, including selling expenses. Genuine Spice Inc. Budgeted Income Statement For the Month Ended August 31 Sales $ 150,000 Finished goods inventory, August 1 $ 12,000 Direct materials inventory, August 1 392 Direct materials purchases 23,231 Direct materials inventory August 31 248 Cost of direct materials for production 23,375 Direct labor 9,900 Factory overhead 19,735 7,000 Finished goods Inventory, August 31 7,000 Cost of goods sold 58,010 Gross profit 91,990 Selling expenses 30,000 Operating income 61,990