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.
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
| DIRECT MATERIALS | ||||
| Cost Behavior | Units per Case | Cost per Unit | 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 | 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 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 | 175 | 7,000 |
Materials Inventory:
| Cream Base | Oils | Bottles | |
|---|---|---|---|
| (ozs.) | (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.
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Prepare the August direct labor cost budget. Round the hours required for production to the nearest hour.* |
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| 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 |
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