production budget
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 Cost per Case Cream base Variable 100 ozs. $0.02 $2.00 Natural oils Variable 30 ods. 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 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: Cases 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 (ozs.) (ozs.) (bottles) Estimated materials inventory, August 1 250 290 600 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. 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-Part B: 5. Prepare the August production budget.* 6. Prepare the August direct materials purchases budget.* 7. Prepare the August direct labor budget. Round the hours required for production to the nearest hour. 8. Prepare the August factory overhead budget. If an amount box does not require an entry, leave it blank. (Entries of zero (O) will be cleared automatically by CNOW.) 9. Prepare the August budgeted income statement, including selling expenses.* * For those boxes in which you must enter subtractive or negative numbers use a minus sign. 5. Prepare the August production budget. For those boxes in which you must enter subtractive or negative numbers use a minus sign. Genuine Spice Inc. Production Budget For the Month Ended August 31 Cases Total units available 6. Prepare the August direct materials purchases budget. For those boxes in which you must enter subtractive or negative numbers use a minus sign. Genuine Spice Inc. Direct Materials Purchases Budget For the Month Ended August 31 Cream Base (ozs.) Natural Oils (ozs.) Bottles (bottles) Total Direct materials to be purchased $ $ $ $ $ $ 7. Prepare the August direct labor budget. Round the hours required for production to the nearest hour. Enter all amounts as positive numbers. Genuine Spice Inc. Direct Labor Cost Budget For the Month Ended August 31 Mixing Filling Total Hours required for production of: $ $ 8. Prepare the August factory overhead budget. Enter all amounts as positive numbers. If an amount box does not require an entry, leave it blank. (Entries of zero (0) will be cleared automatically by CNOW.) Genuine Spice Inc. Factory Overhead Cost Budget For the Month Ended August 31 Fixed Variable Total Factory overhead: Utilities $ $ Facility lease Equipment depreciation Supplies Total $ $ $ Budgeted Income Statement For the Month Ended August 31 Sales $ Finished goods inventory, August 1 Direct materials inventory, August 1 $ Direct materials purchases Direct materials inventory, August 31 Cost of direct materials for production $ Direct labor Factory overhead Finished goods inventory, August 31 Cost of goods sold Gross profit $ Selling expenses Income before income tax $ 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 Cost per Case Cream base Variable 100 ozs. $0.02 $2.00 Natural oils Variable 30 ods. 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 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: Cases 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 (ozs.) (ozs.) (bottles) Estimated materials inventory, August 1 250 290 600 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. 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-Part B: 5. Prepare the August production budget.* 6. Prepare the August direct materials purchases budget.* 7. Prepare the August direct labor budget. Round the hours required for production to the nearest hour. 8. Prepare the August factory overhead budget. If an amount box does not require an entry, leave it blank. (Entries of zero (O) will be cleared automatically by CNOW.) 9. Prepare the August budgeted income statement, including selling expenses.* * For those boxes in which you must enter subtractive or negative numbers use a minus sign. 5. Prepare the August production budget. For those boxes in which you must enter subtractive or negative numbers use a minus sign. Genuine Spice Inc. Production Budget For the Month Ended August 31 Cases Total units available 6. Prepare the August direct materials purchases budget. For those boxes in which you must enter subtractive or negative numbers use a minus sign. Genuine Spice Inc. Direct Materials Purchases Budget For the Month Ended August 31 Cream Base (ozs.) Natural Oils (ozs.) Bottles (bottles) Total Direct materials to be purchased $ $ $ $ $ $ 7. Prepare the August direct labor budget. Round the hours required for production to the nearest hour. Enter all amounts as positive numbers. Genuine Spice Inc. Direct Labor Cost Budget For the Month Ended August 31 Mixing Filling Total Hours required for production of: $ $ 8. Prepare the August factory overhead budget. Enter all amounts as positive numbers. If an amount box does not require an entry, leave it blank. (Entries of zero (0) will be cleared automatically by CNOW.) Genuine Spice Inc. Factory Overhead Cost Budget For the Month Ended August 31 Fixed Variable Total Factory overhead: Utilities $ $ Facility lease Equipment depreciation Supplies Total $ $ $ Budgeted Income Statement For the Month Ended August 31 Sales $ Finished goods inventory, August 1 Direct materials inventory, August 1 $ Direct materials purchases Direct materials inventory, August 31 Cost of direct materials for production $ Direct labor Factory overhead Finished goods inventory, August 31 Cost of goods sold Gross profit $ Selling expenses Income before income tax $
