Hello I was hoping get help with just parts A B and C Any he

Hello, I was hoping get help with just parts A, B, and C. Any help would be appreciated, thank you!

X

Instructions

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:

Part A—Break-Even Analysis

The management of Genuine Spice Inc. wishes 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:

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:

Materials Inventory:

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.

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

The prices of the materials were different than 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.

X

Amount Descriptions

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

Chapter 22 Comprehensive Problem eRook A the High Point Gonuise 8po In. Direct Materiols Pusehases Budgot Natural Olaoan Factory Oeresd Coet Budoget Direct Labor Cos Factory Dirvet Labor Cost Budast For the Wonth Ended Augual 31 tuality kouso Hows reqdred for production eh Mising Fling

Solution

Part A

1.

Working:

Variable utility cost = ($740 - $600)/(1200 - 500) = $140/700 = $0.20 per case

Fixed cost (at the high point) = $740 - ($0.20 x 1200) = $740 - $240 = $500

Fixed cost (at the low point) = $600 - ($0.20 x 500) = $600 - $100 = $500

2. Contribution margin per case: $55.60

3. Fixed costs per month: $19460

4. Break-even number of cases per month: 350

Break-even (units) = Total fixed costs/Contribution margin per unit = $19460/$55.60 = 350 cases

Per Chegg guidelines, 4 sub-parts have been answered.

	At the High Point	At the Low Point
Variable cost per unit	$0.20	$0.20
Total fixed cost	$500	$500
Total cost	$740	$600