Question

I KNOW THIS IS A LONG QUESTION BUT CAN SOMEONE PLEASE!! ANSWERTHE FULL QUESTION it is not due immediately

Genuine Spice Inc. began operations on January 1, 2016. Thecompany produces eight-ounce bottles of hand and body lotion calledEternal Beauty. The lotion is sold wholesale in 12-bottle cases for$100 per case. There is a selling commission of $20 per case. TheJanuary direct materials, direct labor, and factory overhead costsare as follows:

DIRECT MATERIALS
	CostBehavior	Units perCase	Cost perUnit	Cost perCase
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	CostBehavior	Time perCase	Labor Rateper Hour	Cost perCase
Mixing	Variable	20 min	$18.00	$6.00
Filling	Variable	5	14.40	1.20
		25 min.		$7.20

FACTORYOVERHEAD
	CostBehavior	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 thenumber of cases required to break even per month. The utilitiescost, which is part of factory overhead, is a mixed cost. Thefollowing information was gathered from the first six months ofoperation regarding this cost:

2016	CaseProduction	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-Part A:
1.	Determine the fixed andvariable portion of the utility cost using the high-lowmethod.
2.	Determine the contributionmargin per case.
3.	Determine the fixed costs permonth, including the utility fixed cost from part (1).
4.	Determine the break-even numberof cases per month.

Part B—August Budgets

During July of the current year, the management of Genuine SpiceInc. asked the controller to prepare August manufacturing andincome statement budgets. Demand was expected to be 1,500 cases at$100 per case for August. Inventory planning information isprovided as follows:

Finished Goods Inventory:

	Cases	Cost
Estimated finished goods inventory,August 1, 2016	300	$12,000
Desired finished goods inventory,August 31, 2016	175	7,000

Materials Inventory:

	CreamBase	Oils	Bottles
	(ozs.)	(ozs.)	(bottles)
Estimated materials inventory,August 1, 2016	250	290	600
Desired materials inventory, August31, 2016	1,000	360	240

There was negligible work in process inventory assumed foreither the beginning or end of the month; thus, none was assumed.In addition, there was no change in the cost per unit or estimatedunits per case operating data from January.

Required-Part B:

5.

Prepare the August productionbudget.*

6.

Prepare the August directmaterials purchases budget.*

7.

Prepare the August direct laborbudget. Round the hours required for production to the nearesthour.*

8.

Prepare the August factoryoverhead budget. If an amount box does not require an entry, leaveit blank. (Entries of zero (0) will be cleared automatically byCNOW.)*

9.

Prepare the August budgetedincome statement, including selling expenses. NOTE: Because you arenot required to prepare a cost of goods sold budget, the cost ofgoods sold calculations will be part of the budgeted incomestatement. *

* Enter all amounts as positivenumbers.

Part C—August Variance Analysis

During September of the current year, the controller was askedto perform variance analyses for August. The January operating dataprovided the standard prices, rates, times, and quantities percase. There were 1,500 actual cases produced during August, whichwas 250 more cases than planned at the beginning of the month.Actual data for August were as follows:

	Actual Direct Materials
	Priceper Unit	Quantity per Case
Cream base	$0.016per oz.	102ozs.
Natural oils	$0.32per oz.	31ozs.
Bottle (8-oz.)	$0.42per bottle	12.5bottles

	Actual Direct	Actual Direct Labor
	LaborRate	Timeper Case
Mixing	$18.20	19.50min.
Filling	14.00	5.60min.

Actual variable overhead	$305.00
Normal volume	1,600cases

The prices of the materials were different than standard due tofluctuations in market prices. The standard quantity of materialsused per case was an ideal standard. The Mixing Department used ahigher grade labor classification during the month, thus causingthe actual labor rate to exceed standard. The Filling Departmentused a lower grade labor classification during the month, thuscausing the actual labor rate to be less than standard.

	Required-Part C:
10.	Determine and interpret thedirect materials price and quantity variances for the threematerials.
11.	Determine and interpret thedirect labor rate and time variances for the two departments. Roundhours to the nearest hour.
12.	Determine and interpret thefactory overhead controllable variance.
13.	Determine and interpret thefactory overhead volume variance.

Questions (Part A)

1. Determine the fixed and variable portion of the utility costusing the high-low method.

	AtHigh Point	AtLow Point
Variable cost per unit
Total fixed cost
Total cost

2. Determine the contribution margin per case.

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

1	Total fixed costs:
2
3
4
5
6

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

Production Budget

5. Prepare the August production budget. Enter all amounts aspositive numbers.

Genuine Spice Inc.
Production Budget
For the Month Ended August 31, 2016
	Cases
Plus
Total
Less

Direct Materials Purchases Budget

6. Prepare the August direct materials purchases budget. Enterall 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
Plus
Less
Total
X

Direct Labor Budget

7. Prepare the August direct labor budget. Round the hoursrequired for production to the nearest hour. Enter all amounts aspositive numbers.

Genuine Spice Inc.
Direct Labor Budget
For the Month Ended August 31, 2016
	Mixing	Filling	Total
X

Factory Overhead Budget

8. Prepare the August factory overhead budget. Enter all amountsas positive numbers. If an amount box does not require an entry,leave it blank. (Entries of zero (0) will be cleared automaticallyby CNOW.)

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

Budgeted Income Statement

9. Prepare the August budgeted income statement, includingselling expenses. Enter all amounts as positive numbers. NOTE:Because you are not required to prepare a cost of goods soldbudget, the cost of goods sold calculations will be part of thebudgeted income statement.

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 materialspurchases
Less direct materialsinventory, August 31
Cost of direct materials forproduction
Direct labor
Factory overhead
Less finished goods inventory,August 31
Cost of goods sold
Gross profit
Selling expenses
Income before income tax

Variance Analysis (Part C)

10. Determine and interpret the direct materials price andquantity variances for the three materials.

Direct Materials Price Variance
	CreamBase		NaturalOils		Bottles
Difference
X
Direct materials pricevariance

Direct Materials Quantity Variance
	CreamBase		NaturalOils		Bottles
Difference
X
Direct materials quantityvariance

The fluctuation in caused the direct material price variances.All the quantity variances were indicating .

11. Determine and interpret the direct labor rate and timevariances for the two departments. Round hours to the nearest tenthof an hour.

Direct Labor Rate Variance
	MixingDepartment		FillingDepartment
Difference
X
Direct labor ratevariance

Direct Labor Time Variance
	MixingDepartment		FillingDepartment
Difference
X
Direct labor timevariance

The change in the caused the labor rate variances. This changehave been responsible for the direct labor time variance.

12. Determine and interpret the factory overhead controllablevariance.

Factory Overhead Controllable Variance
Factory overhead controllablevariance

The factory overhead controllable variance was caused by thevariance in .

13. Determine and interpret the factory overhead volumevariance. Round rate to four decimal places.

Factory Overhead Volume Variance
Normal volume (cases)
Actual volume (cases)
Difference
X
Factory overhead volumevariance

The volume variance indicates the cost of .