Reference no: EM13358493
Development of standard costs
Tastee fruit company is a small producer of fruit flavored frozen desserts. For many years, its products have had strong regional sales on the basis of brand recognition. However other companies have begun marketing similar products in the area and price compettiton has become increasingly important. John Wakefield the company's controller, is planning to implement a standard costing system and has gathered considerable information on production and materials requirements for Tastee fruits products. He believes that the use of stabdard costing will allow the company to make better pricing decisons. Tatstee fruits most popular product is raspberry sherbert. The sherbert is produced in 10 gal batches, and eacj batch requires 6 qts of good raspberries. The fresh berries are sorted by hand before entering the production process. Because of imperfections in the berries and normal spoilage one qt of berries is discarded for every 4 qts accpeted. Three minutes is the standard direct labor time for the sorting required to obtain 1 qt. of acceptable berries. The accpetable berries are then blended with the other ingredients; blending requires 12 minutes of direct labor time per batch. After blending the sherbert is packaged in qt containers. Wakefield has gathered the following information from Teresa Adams, Tastee fruits cost accountant.
Tastee fruit perchases berries at a cost of $.80 per qt. All other ingredients cost a total of $.45 per gal.
Direct labor is paid at the rate of $9/hr.
The total cost of material and labor required to package the sherbert is $1.41 per qt.
Adams has a friend who owns a berry farm that has been losing money in recent years. Because of good crops, an oversupply of berries has been available and prices have dropped to $.50 per qt. Adams has arranged for Tastee fruit to purchase berries from her friend and hopes that $.80 per qt will help her friend's farm become profitable again.
Required:
a.) develop the standard cost of direct material, direct labor and packaging for a 10 gal batch of nerries sherbert.
b.) As part of the implementation of a standard costing system, Wakefield plans to train those responsible for maintaining the standards in the use of variance analysis. He is particularly concerned with the causes of infavorable variances. As his assistant, prepare a page for a company training document that discusses the following:
(1) the possible causes of unfavorable material price variances and identifies the individual(s) who should be held responsible for these variances.
(2) the possible causes of unfavorable labor efficiency variances and identifies the individual(s) who shuld be held responsible for these variances.
c.) Citing the specific ethical stabdards of competence, confidentiality, integrity and objectivity for management accountants, explain why Adams's behavior regarding the cost information provided to Wakefield is unethical
d.) Build an excel spreadsheet to solve requirement (a) Use your spreadsheet to determine the new values for all of the amounts calculated in requirements (a) if each of the following input parameters changes by the amount indicated (unless otherwise indicated, treat each parameter change independently.)
(1) the standard cost of berries is $.90 per qt.
(2) The standard cost of direct labor for sorting and blending is $9.50 per hour.
(3) the total standard cost of material and labor for packaging is $.45 per qt of sherbert.
(4) all of the changes in parts(1) though (3) occur simultaneously.
There are other partsd to this that I have figured out but this is the rest and it doesn't seem to make sense to me.