2 of 9 Comprehensive Problem 5 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. 12/1/2022, 2:22 PM Genuine Spice Inc. began operations on January 1 of the current year. The company produces eight-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 Units Cost Direct Materials Behavior per Case per Unit Cost per Case Cream base Natural oils Variable Variable 100 oz. $0.02 $2.00 30 oz. 0.30 9.00 Bottle (8-oz.) Variable 12 bottles 0.50 6.00 $17.00 DIRECT LABOR Cost Time Labor Rate Direct Labor Department Behavior per Case per Hour Cost per Case Mixing Filling Variable 20 min Variable 5 $18.00 $6.00 14.40 1.20 25 min $7.20 FACTORY OVERHEAD Cost Behavior Total Cost Utilities Mixed $500 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: Case Cost Estimated finished goods inventory, August 1 300 $12,000 Desired finished goods inventory, August 31 175 7,000 4 of 9 Materials Inventory: (ozs.) Cream Base Oils Bottles (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. Required: 5. Prepare the August production budget. Enter all amounts as positive numbers. Genuine Spice Inc. Production Budget For the Month Ended August 31 Expected cases to be sold Plus desired ending inventory Total units required Less estimated beginning inventory Total units to be produced Cases 6. Prepare the August direct materials purchases budget. Enter the unit price to the nearest cent. Enter all amounts as positive numbers. Units required for production Plus desired ending inventory Total units required Genuine Spice Inc. Direct Materials Purchases Budget For the Month Ended August 31 Less estimated beginning inventory Total materials to be purchased Direct Materials Cream Base (ozs.) Natural Oils (ozs.) Bottles (bottles) Total 12/1/2022, 2:22 PM Firefox 5 of 9 https://exp.cengage.com/activityservice run/html5/handler.jsp/id-al.. Unit price $ Total direct materials to be purchased $ $ 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 Mixing Filling Total Hours required for production: Hand and body lotion Hourly rate $ $ Total direct labor cost $ $ $ 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 $ Utilities Facility lease Equipment depreciation Supplies Total factory overhead cost $ 9. Prepare the August budgeted income statement, including selling expenses. Enter all amounts as positive numbers. Sales Genuine Spice Inc. Budgeted Income Statement For the Month Ended August 31 Finished goods inventory, August 1 $ 12/1/2022 3:22 PM