Reference no: EM132953508
Case - One of Betsure Betsher bestselling products is raspberry sherbet, which is manufactured in 10-gallon batches.
Each batch requires 6 quarts of raspberries. The raspberries are sorted by hand before entering the production process and, because of imperfections, 1 quart of berries is discarded for every 4 quarts of acceptable berries.
The standard direct labor sorting time to obtain 1 quart of acceptable raspberries is 3 minutes. After sorting, raspberries are blended with other ingredients; blending requires 12 minutes of direct labor time per batch. During the blending process, some sherbet is lost because it adheres to the blending vats. After blending, the sherbet is packaged in quart containers. The following cost information is relevant:
Raspberries are purchased for P0.80 per quart.
All other ingredients cost a total of P0.45 per gallon.
Direct labor is paid P9.00 per hour.
The total cost of material and labor required to package the sherbet is P0.38 per quart.
a. Develop the standard cost for the direct cost components of a 10-gallon batch of raspberry sherbet. The standard cost should identify standard quantity, standard price/rate, and standard cost per batch for each direct cost component.
b. Discuss the possible causes of unfavorable material price variances, and identify the individual(s) who should be held responsible for these variances.
c. Discuss the possible causes of unfavorable labor efficiency variances, and identify the individual(s) who should be held responsible for these variances.
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