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. 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 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 Cost Behavior Time per Case Labor Rate per Hour Direct Labor 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 BAugust 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 (ozs.) Oils (ozs.) Bottles (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. Genuine Spice Inc. Production Budget For the Month Ended August 31 Cases fill in the blank 2 fill in the blank 4 fill in the blank 6 fill in the blank 8 fill in the blank 10 6. Prepare the August direct materials purchases budget. Enter the unit price to the nearest cent. Genuine Spice Inc. Direct Materials Purchases Budget For the Month Ended August 31 Cream Base (ozs.) Natural Oils (ozs.) Bottles (bottles) Total fill in the blank 12 fill in the blank 13 fill in the blank 14 fill in the blank 16 fill in the blank 17 fill in the blank 18 fill in the blank 20 fill in the blank 21 fill in the blank 22 fill in the blank 24 fill in the blank 25 fill in the blank 26 $fill in the blank 28 $fill in the blank 29 $fill in the blank 30 $fill in the blank 32 $fill in the blank 33 $fill in the blank 34 $fill in the blank 35 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 of: fill in the blank 37 fill in the blank 38 $fill in the blank 40 $fill in the blank 41 $fill in the blank 43 $fill in the blank 44 $fill in the blank 45 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 Fixed Variable Total Factory overhead: $fill in the blank 47 $fill in the blank 48 $fill in the blank 49 fill in the blank 51 fill in the blank 52 fill in the blank 53 fill in the blank 55 fill in the blank 56 fill in the blank 57 fill in the blank 59 fill in the blank 60 fill in the blank 61 Total $fill in the blank 62 $fill in the blank 63 $fill in the blank 64 9. Prepare the August budgeted income statement, including selling expenses. Genuine Spice Inc. Budgeted Income Statement For the Month Ended August 31 $fill in the blank 66 $fill in the blank 68 $fill in the blank 70 fill in the blank 72 fill in the blank 74 $fill in the blank 76 fill in the blank 78 fill in the blank 80 fill in the blank 81 fill in the blank 83 fill in the blank 85 $fill in the blank 87 fill in the blank 89 $fill in the blank 91 Check My Work2 more Check My Work uses remaining.

Part B: from Part A when completing this section. case. There is a selling commission of $20 per case. The January direct materials, direct labor, and factory overhead costs are as follows: for August. Inventory planning information is provided as follows: Finished Goods Inventory: Materials Inventory: operating data from January. Required: 5. Prepare the August production budget. 6. Prepare the August direct materials purchases budget. Enter the unit price to the nearest cent. 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. 8. Prepare the August factory overhead cost budget. If an amount box does not require an entry, leave it blank. 9. Prepare the August budgeted income statement, including selling expenses. 9. Prepare the August budgeted income statement, including selling expenses