Part B. Budgets During July of the current year, the management of Quivers Inc. asked the controller, Robin, to prepare August manufacturing and income statement budgets. Demand was expected to be 1,500 cases of jet wax at $100 per case for August. Inventory planning linformation is provided as follows: Finished Goods Inventory Estimated finished goods inventory, Aug Desired finished goods inventory, Augus Cases 300 175 Cost ##### $7,000.00 Materials Inventory Estimated materials inventory, August 1 Desired materials inventory, August 31 Cream Base (oz.) Oils (oz.) 3ottels (oz.) 250 290 600 1,000 360 240 Quivers Inc. began operations on January 1 of the current year. The company produces eight-ounce bottles of jet wax called Ophelia Shine. The wax 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 Crear base Natural oils Bottle (8-oz. DIRECT MATERIALS Cost Units Behavior per Case Variable 100 oz Variable 30 oz. Variable 12 bottles Cost per Unit 50.02 0.30 0.50 Direct Materials Cost per Case $ 2.00 9.00 6.00 $17.00 Department Mixing Filling Cost Behavior Variable Variable DIRECT LABOR Time per Case 20 min. 5 25 min Labor Rate per Hour $18.00 14.40 Direct Labor Cost per Case $6.00 1.20 $7.20 FACTORY OVERHEAD Cost Behavior Total Cost Utilities Mixed $ 600 Facility lease Fixed 14,000 Equipmenr depreciation Fixed 4,300 Supplies Fixed 660 $19,560 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 operatina data from Januarv. Instructions 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. 9.Prepare the August budgeted income statement, including selling expenses. B D E F G H J K 4 A 1 REQUIREMENT #5: Develop the production budget. 2 3 Quivers Inc. Production Budget For the Month Ended August 31 5 6 Cases Expected cases to be 7 sold Plus desired ending 8 inventory 9 Total units required Less estimated beginning 10 inventory Total units to be 11 produced 12 13 14 15 16 17 Requirement #6: Develop the direct materials purchases budget. Bottles (bottles) Total Quivers Inc. Direct Materials Purchases Budget For the Month Ended August 31 Cream Natural Base (oz. Oils Units required for production Plus desired ending inventory Total units required Less estimated beginning inventory Total materials to be purchased x Unit price Total direct materials to be purchased Raw Materials Units X Volume = Total Cream Base Natural Oils Bottles Requirement #7: Develop the direct labor cost budget. Quivers Inc. Direct Labor Cost Budget For the Month Ended August 31 Labor Units x Production Time Hour = Total Mixing Filling Total Mixing Filling Hours required for production of: Ophelia Wax Product x Hourly rate Total direct labor cost Requirement #8: Develop the factory overhead cost budget. Quivers Inc. Factory Overhead Cost Budget For the Month Ended August 31 Cost Total Fixed Variable Total Cost Cases Fixed Cost [from Question 3] Variable Utility Cost Utilities Facility Lease Equipment Depreciation Supplies Total factory overhead cost Requirement #9: Create the budgeted income statement. Units x Price = Total Sales Selling Expenses Cream Base (oz) Oils (oz) Bottels (oz.) Total Quivers Inc. Budgeted Income Statement For the Month Ended August 31 Sales Finished goods inventory, August 1 Direct materials: Direct materials inventory, August 1 Direct materials purchases (from Question 6] Cost of direct materials available for use Less direct materials inventory, August 31 Cost of direct materials placed in production Direct labor [from Question 7] Factory overhead [from Question 8] 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 from operations Direct materials inventory, August 1 Direct materials inventory, August 31 Rate Cream Base (oz) Oils (oz Bottels (oz