Question

PLEASE ANSWER ONLY # 11, 12, 14 as on the pictures bellow and only the parts that are wrong. Thank you.

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 Behavior	Units per Case	Cost per Unit	Cost per Case
Cream base	Variable	100 oz.	$0.02	$ 2.00
Natural oils	Variable	30 oz.	0.30	9.00
Bottle (8-oz.)	Variable	12 bottles	0.50	6.00
You are in Column DIRECT MATERIALS	You are in Column DIRECT MATERIALS Cost Behavior	You are in Column DIRECT MATERIALS Units per Case	You are in Column DIRECT MATERIALS Cost per Unit	$17.00You are in Column DIRECT MATERIALS Cost per Case

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
You are in Column DIRECT LABOR Department	You are in Column DIRECT LABOR Cost Behavior	25 min.You are in Column DIRECT LABOR Time per Case	You are in Column DIRECT LABOR Labor Rate per Hour	$7.20You are in Column DIRECT LABOR Cost per Case

FACTORY OVERHEAD
	Cost Behavior	Total Cost
Utilities	Mixed	$600
Facility lease	Fixed	14,000
Equipment depreciation	Fixed	4,300
Supplies	Fixed	660
You are in Column FACTORY OVERHEAD	You are in Column FACTORY OVERHEAD Cost Behavior	$19,560You are in Column FACTORY OVERHEAD Total Cost

Part A—Break-Even Analysis

The management of Genuine Spice Inc. wants 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 operation regarding this cost:

	Case Production	Utility Total Cost
January	500	$600
February	800	660
March	1,200	740
April	1,100	720
May	950	690
June	You are in Column Case Production1,025	You are in Column Utility Total Cost705

	Required-Part A:
1.	Determine the fixed Costs that tend to remain the same in amount, regardless of variations in the level of activity. and variable Costs that vary in total dollar amount as the level of activity changes. portion of the utility cost using the high-low A technique that uses the highest and lowest total costs as a basis for estimating the variable cost per unit and the fixed cost component of a mixed cost. method.
2.	Determine the contribution margin Sales less variable costs and variable selling and administrative expenses. per case.
3.	Determine the fixed costs per month, including the utility fixed cost from part (1).
4.	Determine the break-even number of cases per month.

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	You are in Column Cases175	You are in Column Cost7,000

Materials Inventory:

	Cream Base	Oils	Bottles
	(oz.)	(oz.)	(bottles)
Estimated materials inventory, August 1	250	290	600
You are in Column (oz.)Desired materials inventory, August 31	You are in Column Cream Base (oz.)1,000	You are in Column Oils (bottles)360	You are in Column Bottles240

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 cost budget. Round the hours required for production to the nearest hour.*
8.	Prepare the August factory overhead cost budget. If an amount box does not require an entry, leave it blank. (Entries of zero (0) will be cleared automatically by CNOW.)*
9.	Prepare the August budgeted income statement, including selling expenses. NOTE: Because you are not required to prepare a cost of goods sold budget, the cost of goods sold calculations will be part of the budgeted income statement.* *Enter all amounts as positive numbers.

Part C—August Variance Analysis

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

	Actual Direct Materials
	Price per Unit	Quantity per Case
Cream base	$0.016 per oz.	102 oz.
Natural oils	$0.32 per oz.	31 oz.
You are in Column Price per UnitBottle (8-oz.)	You are in Column Actual Direct Materials Quantity per Case$0.42 per bottle	You are in Column Actual Direct Materials12.5 bottles

	Actual Direct	Actual Direct Labor
	Labor Rate	Time per Case
Mixing	$18.20	19.50 min.
You are in Column Labor RateFilling	You are in Column Actual Direct Time per Case14.00	You are in Column Actual Direct Labor5.60 min.

Actual variable overhead	$305.00
Normal volume	1,600 cases

The prices of the materials were different from standard due to fluctuations in market prices. The standard quantity of materials used per case was an ideal standard. The Mixing Department used a higher grade labor classification during the month, thus causing the actual labor rate to exceed standard. The Filling Department used a lower grade labor classification during the month, thus causing the actual labor rate to be less than standard

	Required-Part C:
10.	Determine and interpret the direct materials price and quantity variances for the three materials.
11.	Determine and interpret the direct labor rate and time variances for the two departments. Round hours to the nearest tenth of an hour.
12.	Determine and interpret the factory overhead controllable variance.
13.	Determine and interpret the factory overhead volume variance.
14.	Why are the standard direct labor and direct materials costs in the calculations for parts (10) and (11) based on the actual 1,500-case production volume rather than the planned 1,375 cases of production used in the budgets for parts (6) and (7)?

Amount Descriptions -Part A
Controllable variance
Equipment depreciation
Facility lease
Supplies
Utilities
Volume variance

11. Determine and interpret the direct labor rate and time variances for the two departments. Round hours to the nearest tenth of an hour. Enter a favorable variance as a negative amount, and an unfavorable variance as a positive amount Direct Labor Rate Variance Filling Department Mixing Department Actual rate $18.20 $14.00 Standard rate v 18.00 14.40 $0.20 -S0.40V Difference 488.0 x 140.0 Actual time $97.60 X -$56.00 Direct labor rate variance F 12 15 Points: Direct Labor Time Variance Mixing Department Filling Department 140.0 Actual time V 488.0 X 500.0V 125.0 Standard time -12.0 x 15.0 Difference 18.00V X Standard rate 14.40v EY $216.00V Direct labor time variance -S216.00 X Points: I 12/15 could also The change in the labor classification caused the labor rate variances. This change have been responsible the direct labor time variance. 12. Determine and interpret the factory overhead controllable variance. Enter a favorable variance as a negative amount, and an unfavorable variance as a positive amount. Factory Overhead Controllable Variance Actual variable overhead S305.00 standard cost Variable overhead 300.00 $5.00 Factory overhead controllable variance U X Incorrect. Please try again. The factory overhead controllable variance was caused by the variance in supplies factory lease equipment depreciation Feedback supplies Check My Work utilities 12. Overhead controllable variance is the difference between the act the standard variable overhead for actual units. (Use the high-low method to determine th variance? based on the actual 1.500-case production volume rather than the olenned 1.375 cases of production used in the budgets for parts (6) and 14. Why are the standard direct labor and direct materials costs in the calculations for parts (10) and (11 (7)? Incorrect. X Please try Variable costs of the budget must flex to the actual or standard production volume, whichever is higher so that variances are compared across the same production volume again. Variable costs of the budget must flex to the actual production volume so that variances are compared across the same production volume. othe standard production volume that variances are compared across the same production volume. Variable costs of the budget must flex Variable costs of the budget must flex to the actual or standard production volume, whichever is higher so that variances are compared across the same production volume. lis

Answer 1

Direct labor rate Variance
	Mixing	Filling
Actual Rate	$               18.20	$                14.00
Standard Rate	$               18.00	$                14.40
Difference	$                 0.20	$                (0.40)
Actual time	$            487.50	$             140.00
Direct labor rate Variance	$               97.50	$             (56.00)
	UnFavorable	Favorable
Direct labor time Variance
	Mixing	Filling
Actual hours	$            487.50	$             140.00
Standard hours	$            500.00	$             125.00
Difference	$            (12.50)	$                15.00
Standard rate	$               18.00	$                14.40
Direct labor time Variance	$          (225.00)	$             216.00
	Favorable	UnFavorable

The factory overhead controllable variance was caused by change in utilities.

Variable Cost of the budget must flex to actual production volume, so that variance can be compared across same production volume.