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 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 Units Cost Cost Behavior Direct Materials Cost per Case per Case per Unit Cream base Variable $0.02 $2.00 100 oz. 30 ozs. Natural oils Variable 0.30 9.00 Bottle (8-oz.) Variable 12 bottles 0.50 6.00 $17.00 DIRECT LABOR Cost Time Labor Rate Direct Labor Department Behavior per Case 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 $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: Case Cost Estimated finished goods inventory, August 1 300 $12,000 Desired finished goods inventory, August 31 175 7,000 Materials Inventory: Cream Base Oils Bottles (bottles) (ozs.) (ozs.) 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 Required: 5. Prepare the August production budget. Enter all amounts as positive numbers. Genuine Spice Inc. Production Budget For the Month Ended August 31 Cases Expected cases to be sold Plus desired ending inventory Total cases required Less estimated beginning inventory Total cases 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 Direct Materials Cream Base (ozs.) Natural Oils (ozs.) Bottles (bottles) TC Units required for production Plus desired ending inventory Less estimated beginning inventory Direct materials to be purchased Unit price Tara di matavil the end SA $ Total direct materials to be purchased 7. Prepare the August direct labor cost budget. For hours required, round to nearest whole hour. For hourly rate, enter to the nearest cent, if required. Genuine Spice Inc. Direct Labor Cost Budget For the Month Ended August 31 Mixing Filling Total Hours required for production: Hand and body lotion Hourly rate Total direct labor cost 8. Prepare the August factory overhead cost budget. If an amount box does not require an entry, leave it blank. Genuine Spice Inc. Factory Overhead Cost Budget For the Month Ended August 31 Variable Total Fixed Factory overhead: Utilities Facility lease Equipment depreciation Supplies Total factory overhead cost 9. Prepare the August budgeted income statement, including selling expenses. Enter all amounts as positive numbers. 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 Less direct materials inventory, August 31 For the Month Ended August 31 Revenue from sales Finished goods inventory, August 1 Direct Materials: Direct materials inventory, August 1 Direct materials purchases 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