Refer. To fileQuestions: Required-Part A: 1. Determine the fixed and variable portion of the utility...

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Refer. To fileQuestions: Required-Part A: 1. Determine the fixed and variable portion of the utility cost using the high-low method. Do not round your intermediate calculations and round variable cost per unit answers to two decimal places. 2. Determine the contribution margin per case. Do not round your intermediate calculations and round your final answer to two decimal places. 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. 	Required Part B: 	5. 	Prepare the August production budget.* 	6. 	Prepare the August direct materials purchases budget. Round unit price answers to two decimal places.* 	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. Required-Part C: 10.Determine and interpret the direct materials price and quantity variances for the three materials. Round your answers to three decimal places. Enter a favorable variance as a negative amount, and an unfavorable variance as a positive amount. 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 computations 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)?

Harshit · Accepted Answer

Answer to Part A
	(1)
	
	
	
	
	
	
	
	High
	Low
	Change
	
	Production Volume
	1200
	500
	700
	In Units
	Utilities Total Cost
	740
	600
	140
	In $
	
	
	
	
	
	
	variable Utilities cost per case = Change in cost/change in production Volume
	
	
	
	
	=
	140/700 units
	
	
	
	
	=
	$0.20 per case
	
	
	
	
	
	
	
	
	Total Fixed Utilities cost = Total Cost at low Volume - Variable cost at low volume
	
	
	$600 - (500 units @ $0.20) = $500
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	At High Point
	At Low Point
	
	
	Variable cost per Unit
	0.20 per case
	0.20 per case
	
	
	Total Fixed Cost
	$500
	$500
	
	
	Total Cost
	
	$740
	$600
	
	
	
	
	
	
	
	
	(2)
	
	
	
	
	
	Contribution Margin Per case
	
	
	
	
	
	SP per case
	100
	
	
	
	Less
	Variable Cost
	
	
	
	
	
	Material
	17
	
	
	
	
	Labour
	7.2
	
	
	
	
	Variable Utilities Cost
	0.2
	
	
	
	
	Selling Commission
	20
	
	
	
	
	
	
	
	
	
	
	Contribution Margin Per case
	55.6
	
	
	
	
	
	
	
	
	
	(3 )
	
	
	
	
	
	Total Fixed Cost
	
	
	
	
	
	Fixed Utilities Cost
	500
	
	
	
	
	Facility Lease
	14000
	
	
	
	
	Equipment Depreciation
	4300
	
	
	
	
	Supplies
	660
	
	
	
	
	
	
	
	
	
	
	Total Fixed Cost
	19460
	
	
	
	
	
	
	
	
	
	(4)
	
	
	
	
	
	Break even Point in Units = total Fixed Cost / Contribution margin per unit
	
	
	
	
	19460/55.6 = 350 cases
	
	
ANSWER to Part b
5. Production Budget
	Particulars
	Amount
	Sales expected
	1,500
	Add: Desired finished goods inventory, August 31
	175
	Total cases required for August
	1,675
	Less: Estimated finished goods inventory, August 1
	300
	Production Budget for August
	1,375
6. Direct Material Purchase Budget
	Particulars
	Cream Base
	Oils
	Bottles
	 
	(ozs.)
	(ozs.)
	(bottles)
	Required for production of 1375 cases
	1,37,500
	41,250
	16,500
	Add: Desired materials inventory, August31
	1,000
	360
	240
	Total Raw materials reqd. for August
	1,38,500
	41,610
	16,740
	Less: Estimated materials inventory, August1
	250
	290
	600
	Raw Material Purchases Budget forAugust
	1,38,250
	41,320
	16,140
7.

Questions: Required-Part A: 1. Determine the fixed and variable portion of the utility cost using the high-low method. Do not round your intermediate calculations and round variable cost per unit...

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