Other information needed to complete:

1. Determine the fixed and variable portion of the utility cost using the high-low method. Round the per unit cost to the nearest cent.

	At High Point	At Low Point
Variable cost per unit	$.2	$.2
Total fixed cost	$500	$500
Total cost	$740	$600

2. Determine the contribution margin per case. Enter your answer to the nearest cent.

Contribution margin per case $55.6

3. Determine the fixed costs per month, including the utility fixed cost from part (1).

Utilities cost (from part 1) $500	$
Facility lease $14000	$
Equipment depreciation $4300	$
Supplies $660	$
Total fixed costs $19460	$

4. Determine the break-even number of cases per month. cases 350 cases

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, 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 Behavior	Units per Case	Cost per Unit	Direct Materials Cost per Case
Cream base	Variable	100 ozs.	$0.02		$2.00
Natural oils	Variable	30 ozs.	0.30		9.00
Bottle (8-oz.)	Variable	12 bottles	0.50		6.00
					$17.00

DIRECT LABOR
Department	Cost Behavior	Time per Case			Labor Rate per Hour	Direct Labor 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 BAugust 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, 2016	300	$12,000
Desired finished goods inventory, August 31, 2016	175	7,000

Materials Inventory:

	Cream Base (ozs.)	Oils (ozs.)	Bottles (bottles)
Estimated materials inventory, August 1, 2016	250	290	600
Desired materials inventory, August 31, 2016	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, 2016
	Cases
Expected cases to be sold
Plus desired ending inventory
Total
Less estimated beginning inventory
Total 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
Units required for production
Plus desired ending inventory
Less estimated beginning inventory
Direct materials to be purchased
Unit price	$			$			$
Total direct materials to 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 Inc. Direct Labor Budget For the Month Ended August 31, 2016
Hours required for production of:	Mixing		Filling		Total
Hand and body lotion
Hourly rate	$		$
Total direct labor cost	$		$		$

8. Prepare the August factory overhead budget. If an amount box does not require an entry, leave it blank.

Genuine Spice Inc. Factory Overhead Budget For the Month Ended August 31, 2016
Factory overhead:	Fixed		Variable		Total
Utilities	$		$		$
Facility lease
Equipment depreciation
Supplies
Total	$		$		$

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, 2016
Sales				$
Finished goods inventory, August 1			$
	Direct materials inventory, August 1	$
	Direct materials purchases
	Less direct materials inventory, August 31
	Cost of direct materials for production	$
	Direct labor
	Factory overhead
Less finished goods inventory, August 31
Cost of goods sold
Gross profit				$
Selling expenses
Income before income tax				$