Business, 11.02.2021 20:50 edjiejwi

Genuine Spice Inc. began operations on January 1 of the current year. The company produces eight- 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: 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

Department Cost Behavior Time per Case Labor Rate per Hour Cost per Case
Mixing Variable 20 min $18.00 $6.00
Filling Variable 5 14.40 1.20
25 min. $7.20

FACTORY OVERHEAD
Cost Behavior Total Cost
Utilities Mixed $600
Facility lease Fixed 14,000
Equipment depreciation Fixed 4,300
Supplies Fixed 660
$19,560

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:

2016 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:

Required-Part A:
a. Determine the fixed and variable portion of the utility cost using the high-low method.
b. Determine the contribution margin per case.
c. Determine the fixed costs per month, including the utility fixed cost from part (1).
d. Determine the break-even number of cases per month.

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Genuine Spice Inc. began operations on January 1 of the current year. The company produces eight- ou...

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