Reference no: EM131773146

1. As a CPA, one of your clients asks you whether his manufacturing company should include standard costs in their cost accounting system. List at least two reasons for including standard costs in your client's cost accounting system and two potential problems with including standard costs in the client's cost accounting system. 

2. Southern Pecan Company grows and sells pecans. The company harvested 10,000 bags of pecans in May and sold everything that it harvested. The company's flexible budget for May was:

Bags sold	10,000
Revenue ($10/bag)		$100,000
Expenses:
Bags ($.50 each)	$5,000
Pecan orchard maintenance	$10,000
Wages and salaries ($2,400 + $.50 per bag)	$7,400
Shipping ($.40 per bag)	$4,000
Other expenses ($1,000 + $.45 per bag)	$5,500
Total Expenses		$31,900
Net operating income		$68,100

The actual results for May were:

Bags sold	10,000
Revenue ($10/bag)		$105,000
Expenses:
Bags ($.50 each)	$5,100
Pecan orchard maintenance	$9,000
Wages and salaries ($2,400 + $.50 per bag)	$7,900
Shipping ($.40 per bag)	$5,000
Other expenses ($1,000 + $.45 per bag)	$5,600
Total Expenses		$32,600
Net operating income		$72,400

Prepare a report detailing the company's revenue and spending variances of May.

3. With the following information, compute the throughput time and the manufacturing cycle efficiency:

Wait time	12.0 days
Inspection time	0.9 days
Processing time	3.5 days
Move time	0.2 days
Queue time	2.0 days

For problems, be sure to answer all questions and provide all requested information.

4. What are the "exceptions" that management by exception considers? How does consideration of these "exceptions" assist a business in evaluating its performance?