Subik's Salves began operations on January 1 of the current year. The company produces 8-ounce bottles of hand and body lotion called Strawberry Dreams. The lotion is sold wholesale in 12-bottle cases for $360 per case. There is a selling commission of $72 per case. The January direct materials, direct labor, and factory overhead costs are as follows: The management of Subik's Salves 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 operations regarding this cost: Instructions: 1. Determine the fixed and variable portions of the utility cost using the high-low method. 2. Determine the contribution margin per case. 3. Determine the fixed costs per month, including the utility fixed cost from (1). 4. Determine the break-even number of cases per month. Part B - August Budgets During July of the current year, the management of Subik's Salves asked the controller to prepare August manufacturing budgets. Demand was expected to be 1,000 cases at $360 per case for August. Inventory planning information is provided as follows: Finished Goods Inventory: Estimated finished goods inventory, August 1: 230 cases Desired finished goods inventory, August 31: 135 cases Materials Inventory: 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. Instructions: 5. Prepare the August production budget. 6. Prepare the August direct materials purchases budget. 7. Prepare the August direct labor budget. 8. Prepare the August factory overhead budget. Check Figures: Part A: Contribution margin per case: $254.79 Part B: Cost of bottles purchased: $10,530 Subik's Salves began operations on January 1 of the current year. The company produces 8-ounce bottles of hand and body lotion called Strawberry Dreams. The lotion is sold wholesale in 12-bottle cases for $360 per case. There is a selling commission of $72 per case. The January direct materials, direct labor, and factory overhead costs are as follows: The management of Subik's Salves 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 operations regarding this cost: Instructions: 1. Determine the fixed and variable portions of the utility cost using the high-low method. 2. Determine the contribution margin per case. 3. Determine the fixed costs per month, including the utility fixed cost from (1). 4. Determine the break-even number of cases per month. Part B - August Budgets During July of the current year, the management of Subik's Salves asked the controller to prepare August manufacturing budgets. Demand was expected to be 1,000 cases at $360 per case for August. Inventory planning information is provided as follows: Finished Goods Inventory: Estimated finished goods inventory, August 1: 230 cases Desired finished goods inventory, August 31: 135 cases Materials Inventory: 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. Instructions: 5. Prepare the August production budget. 6. Prepare the August direct materials purchases budget. 7. Prepare the August direct labor budget. 8. Prepare the August factory overhead budget. Check Figures: Part A: Contribution margin per case: $254.79 Part B: Cost of bottles purchased: $10,530