NOTE: PLEASE ANSWER ONLY THE ONE INCORRECT AND SPECIFIED IN THE SAME ORDER / SAM

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NOTE: PLEASE ANSWER ONLY THE ONE INCORRECT AND SPECIFIED IN THE SAME ORDER / SAME NAME.

I PROVIDED ALL THE INFORMATION SO YOU CAN HAVE IT BUT I ONLY NEED THE ONE IN RED.

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:

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 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

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)?

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 Calculator 150,000 Finished goods inventory, August 1 S12,000 Direct materials: $392V 23,231V $23,623V Direct materials inventory, August 1 Direct materials purchases Cost of direct materials available for use Less direct materials inventory, August 31 Cost of direct materials for production Direct abor Factory overhead Cost of goods manufactured Cost of finished goods available for sale Less finished goods inventory, August 31 Cost of goods sold Gross profit Selling expenses $23,375V 9,800 9,735 53.010 4,000 X .000 919S0M Income before income tax $61,90 Points:15/16

Explanation / Answer

1). Cost of finished goods available for sale = Cost of goods manufactured + Finished goods opening Inventory
=53010+12000 =65010

2). In Direct Material Price Variance, for difference in amounts put (-) negative sign for favourable variance.

3). In Direct Labour Rate Variance, Actual time for mixing department is 1500*19.5/60 = 487.5
For Filling Department, it is favourable variance use negative (-) sign means put favourable variance in negative amount.

4). In Direct Labour Time Variance, Mixing department will automatically correct on above basis. For filling department , standard time is 1500*5min*60 = 125

5). Factory overhead Volume Variance
Factory overhead rate variance = Fixed Factory overhead / Budgeted output. Now you can calculate and put it.

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