Comprehensive Problem 5
Part A:
Note: You must complete part A before completing parts B and C.
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 12bottle 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:

Part A—BreakEven 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:
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 portion of the utility cost using the highlow method. Round the per unit cost to the nearest cent.
At High Point  At Low Point  
Variable cost per unit  $  $ 
Total fixed cost  $  $ 
Total cost  $  $ 
2. Determine the contribution margin per case. Enter your answer to the nearest cent.
Contribution margin per case $
3. Determine the fixed costs per month, including the utility fixed cost from part (1).
Utilities cost (from part 1)  $ 
Facility lease  
Equipment depreciation  
Supplies  
Total fixed costs  $ 
4. Determine the breakeven number of cases per month.
cases
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