Comprehensive Problem 5 Part C:

Note: This section is a continuation from Parts A and B of the comprehensive problem. Be sure you have completed Parts A and B before attempting Part C. You may have to refer back to data presented in Parts A and B as well as use answers from those parts 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:

Products	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
Total direct materials cost per case				$17.00

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 min.	14.40	1.20
Total direct labor cost per case		25 min.		$7.20

Line Item Description	Cost Behavior	Total Cost
Utilities	Mixed	$600
Facility lease	Fixed	14,000
Equipment depreciation	Fixed	4,300
Supplies	Fixed	660
Total cost		$19,560

Part CAugust 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:

Products	Actual Direct Materials Price per Unit	Actual Direct Materials Quantity per Case
Cream base	$0.016 per oz.	102 ozs.
Natural oils	$0.32 per oz.	31 ozs.
Bottle (8-oz.)	$0.42 per bottle	12.5 bottles

Line Item Description	Actual Direct Labor Rate	Actual Direct Labor Time per Case
Mixing	$18.20	19.50 min.
Filling	14.00	5.60 min.
Actual variable overhead	$305.00
Normal volume	1,600 cases

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.

Required:

Enter subtracted amounts with minus sign.

Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

10. Determine and interpret the direct materials price and quantity variances for the three materials. Enter the costs in dollars and cents (carried to three decimal places when required).

Line Item Description	Cream Base	Natural Oils	Bottles
Actual price	$fill in the blank 1	$fill in the blank 2	$fill in the blank 3
Standard price	fill in the blank 4	fill in the blank 5	fill in the blank 6
Difference	$fill in the blank 7	$fill in the blank 8	$fill in the blank 9
Actual quantity (units)	fill in the blank 10 ozs.	fill in the blank 11 ozs.	fill in the blank 12 btls.
Direct materials price variance	$fill in the blank 13	$fill in the blank 14	$fill in the blank 15
Indicate if favorable or unfavorable	FavorableUnfavorable	FavorableUnfavorable	FavorableUnfavorable

Enter the standard price to two decimal places.

Line Item Description	Cream Base	Natural Oils	Bottles
Actual quantity	fill in the blank 19 ozs.	fill in the blank 20 ozs.	fill in the blank 21 btls.
Standard quantity	fill in the blank 22	fill in the blank 23	fill in the blank 24
Difference	fill in the blank 25 ozs.	fill in the blank 26 ozs.	fill in the blank 27 btls.
Standard price	fill in the blank 28	fill in the blank 29	fill in the blank 30
Direct materials quantity variance	$fill in the blank 31	$fill in the blank 32	$fill in the blank 33
Indicate if favorable or unfavorable	FavorableUnfavorable	FavorableUnfavorable	FavorableUnfavorable

11. Determine and interpret the direct labor rate and time variances for the two departments. Do not round hours. Enter the costs in dollars and cents.

Line Item Description	Mixing Department	Filling Department
Actual rate	$fill in the blank 37	$fill in the blank 38
Standard rate	fill in the blank 39	fill in the blank 40
Difference	$fill in the blank 41	$fill in the blank 42
Actual time (hours)	fill in the blank 43	fill in the blank 44
Direct labor rate variance	$fill in the blank 45	$fill in the blank 46
Indicate if favorable or unfavorable	FavorableUnfavorable	FavorableUnfavorable

Line Item Description	Mixing Department	Filling Department
Actual time (hours)	fill in the blank 49	fill in the blank 50
Standard time (hours)	fill in the blank 51	fill in the blank 52
Difference	fill in the blank 53	fill in the blank 54
Standard rate	$fill in the blank 55	$fill in the blank 56
Direct labor time variance	$fill in the blank 57	$fill in the blank 58
Indicate if favorable or unfavorable	FavorableUnfavorable	FavorableUnfavorable

12. Determine and interpret the direct labor rate and time variances for the two departments.

Line Item Description	Amount
Actual variable overhead	$fill in the blank 61
Variable overhead at standard cost	fill in the blank 62
Factory overhead controllable variance	$fill in the blank 63
Indicate if favorable or unfavorable	FavorableUnfavorable

13. Determine and interpret the factory overhead volume variance. Round rate to four decimal places and round your final answer to two decimal places.

Line Item Description	Amount
Normal volume (cases)	fill in the blank 65
Actual volume (cases)	fill in the blank 66
Difference	fill in the blank 67
Fixed factory overhead rate	$fill in the blank 68
Factory overhead volume variance	$fill in the blank 69
Indicate if favorable or unfavorable	FavorableUnfavorable

14. The production volume of fill in the blank 1 of 3 cases was planned at the beginning of August. The variances compare the actual cost and the standard cost of fill in the blank 2 of 3

actual productionbudgeted production

for the month. Thus, the standard cost must be based on the fill in the blank 3 of 3 units of actual production.