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 CostBehavior 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 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: Month Case Production Utility Total Cost January 500 $600 February 800 660 March 1,200 740 April 1,100 720 May 950 690 June 1,025 705 Required: 1. Determine the fixed and variable portions of the utility cost using the high-low method. Round the per unit cost to the nearest cent. Line Item Description At the High Point At the Low Point Variable cost per unit $fill in the blank 1 $fill in the blank 2 Total fixed cost fill in the blank 3 fill in the blank 4 Total cost fill in the blank 5 fill in the blank 6 2. Determine the contribution margin per case. Round your answer to the nearest cent.Contribution margin per case fill in the blank 1 of 1$ 3. Determine the fixed costs per month, including the utility fixed cost from part (1). Line Item Description Fixed Costs per Month Utilities cost (from part 1) $fill in the blank 8 Facility lease fill in the blank 9 Equipment depreciation fill in the blank 10 Supplies fill in the blank 11 Total fixed costs $fill in the blank 12 4. Determine the break-even number of cases per month.fill in the blank 1 of 1$ cases
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
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 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:
Month | Case Production | Utility Total Cost |
---|---|---|
January | 500 | $600 |
February | 800 | 660 |
March | 1,200 | 740 |
April | 1,100 | 720 |
May | 950 | 690 |
June | 1,025 | 705 |
Required:
1. Determine the fixed and variable portions of the utility cost using the high-low method. Round the per unit cost to the nearest cent.
Line Item Description | At the High Point | At the Low Point |
---|---|---|
Variable cost per unit | $fill in the blank 1 | $fill in the blank 2 |
Total fixed cost | fill in the blank 3 | fill in the blank 4 |
Total cost | fill in the blank 5 | fill in the blank 6 |
2. Determine the contribution margin per case. Round your answer to the nearest cent.
Contribution margin per case fill in the blank 1 of 1$
3. Determine the fixed costs per month, including the utility fixed cost from part (1).
Line Item Description | Fixed Costs per Month |
---|---|
Utilities cost (from part 1) | $fill in the blank 8 |
Facility lease | fill in the blank 9 |
Equipment depreciation | fill in the blank 10 |
Supplies | fill in the blank 11 |
Total fixed costs | $fill in the blank 12 |
4. Determine the break-even number of cases per month.
fill in the blank 1 of 1$ cases
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