PARTA PART B Comprehensive Problem 5 Part A: Note: You must complete part A before completing parts B and C. 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 Direct Materials Cost per Case Cream base Natural oils Bottle (B-oz.) Variable 100 ozs. $0.02 $2.00 Variable 30 025. 0.30 9.00 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 Filing Variable 5 14.40 1.20 25 min. $7.20 Next eBook 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 A-Break-Even Analysis The management of Genuine Spice Inc. wishes to determine the number of cases required to break of factory overhead, is a mixed cost. The following information was gathered from the first six mon Month Case Production January 500 Utility Total Cost $600 Part A-Break Even Analysis 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 factory 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: 1. Determine the fixed and variable portions of the utility cost using the high-low method. Round the per unit cost to the nearest cent. At the High Point At the Low Point Variable cost per unit Total fixed cost Total cost 2. Determine the contribution margin per case. Round your answer to the nearest cent. Contribution margin per case s June 1,025 705 Required: 1. Determine the fixed and variable portions of the utility cost using the high-low method. Round the per unit cost to the nearest cent. At the High Point At the Low Point Variable cost per unit Total fixed cost Total cost 2. Determine the contribution margin per case. Round your answer to the nearest cent. Contribution margin per case s 3. Determine the fixed costs per month, including the utility fixed cost from part (1). Utilities cost (from part 1) Facility lease Equipment depreciation. Supplies Total fixed costs 4. Determine the break-even number of cases per month. cases Comprehensive Problem 51 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 Cost Behavior Units per Case Cost per Unit Direct Materials Cost per Case Cream base Variable 100 oz. $0.02 $2.00 Natural oils Bottle (6-oz.) Variable Variable 30 oz. 12 bottles 0.30 9.00 0.50 6.00 $17.00 DIRECT LABOR Department Mixing Cost Behavior Variable Time per Case Labor Rate Direct Labor per Hour Cost per Case 20 min. $18.00 $6.00 Filling Variable 5 14.40 1.20 25 min $7.20 4 eBook DIRECT LABOR Department Cost Behavior Time Labor Rate Direct Labor 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 pre budgets. Demand was expected to be 1,500 cases at $100 per case for August. Inventory plannin Finished Goods Inventory: Cases Cost 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 ( Estimated finished goods inventory, August 1 Desired finished goods inventory, August 31 300 $12,000 175 7,000 Materials Inventory: Estimated materials inventory, August 1 Desired materials inventory, August 31 Cream Base (ozs.) Oils Bottles (ozs.) (bottles) 250 290 600 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. Conuine Spice Inc eBook Desired materials inventory, August 51 1,000 There was negligible work in process inventory assumed for either the beginning or enc no change in the cost per unit or estimated units per case operating data from January. Required: 5. Prepare the August production budget. Genuine Spice Inc. Production Budget For the Month Ended August 31 Cases 6. Prepare the August direct materials purchases budget. Enter the unit price to t Genuine Spice Inc. Direct Materials Purchases Budget 1.PARTA 6. Prepare the August direct materials purchases budget. Enter the unit price to the nearest cent. PART.B Genuine Spice Inc. - Direct Materials Purchases Budget For the Month Ended August 31 Cream Base (ozs.) Natural Oils (ozs.) Bottles (bottles) Total 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 PARTA PART B eBook 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 Hours required for production of: Hand and body lotion Hourly rate Total direct labor cost Mixing Filling Total Total direct materials to be purchased Unit price 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 Factory overhead: Fixed Variable Total eBook 8. Prepare the August Factory overhead cost budget. If an amount box does not require an entry, leave it blan Genuine Spice Inc. Factory Overhead Cost Budget For the Month Ended August 31 Factory overhead: Total Fixed Variable Total 9. Prepare the August budgeted income statement, including selling expenses. Genuine Spice Inc. Budgeted Income Statement For the Month Ended August 31 eBook 9. Prepare the August budgeted income statement, including selling expenses. Genuine Spice Inc. Budgeted Income Statement For the Month Ended August 31