PLEASE ANSWER THE BLUE SQUARES (lumber, footpads, prepare and cut, assemble and

Question

PLEASE ANSWER THE BLUE SQUARES (lumber, footpads, prepare and cut, assemble and finish)

Problem 10-42 Development of Standard Costs (LO 10-1, 10-2, 10-5) Ogwood Company's Johnstown Division is a small manufacturer of wooden household items. Al Rivkin, division controller, plans to implement a standard-costing system. Rivkin has collected information from several co-workers that will assist him in developing standards. One of the Johnstown Division's products is a wooden cutting board. Eaclh cutting board requires 1.25 board feet of lumber and 12 minutes of direct-labor time to prepare and cut the lumber. The cutting boards are inspected after they are cut. Because the cutting boards are made of a natural material that has imperfections, one board is normally rejected for each five that are accepted. Four rubber foot pads are attached to each good cutting board. A total of 15 minutes of direct-labor time is required to attach all four foot pads and finish each cutting board. The lumber for the cutting boards cost $3.00 per board foot, and each foot pad costs $0.05. Direct labor is paid at the rate of $8.00 per hour Required: 1. Develop the standard cost for direct material and direct labor of a cutting board 2. Select the person who has the primary role in each of the following activities associated with developing standards a. Purchasing manager b. Industrial engineer a. Managerial accountant. 3. The production manager complained that the standards are unrealistic, stifle motivation by concentrating only on unfavorable variances, and are out of date too quickly. He noted that his recent switch to cherry for the cutting boards has resulted in higher material costs but decreased labor hours. The net result was no increase in the total cost to produce the product. The monthly reports continue to show an unfavorable material variance and a favorable labor variance despite indications that the workers are slowing down a. Identify the factors of standard-costing system that strengthen cost management. b. A standard-costing system could negatively impact the motivation of production employees. State whether the following statements are True or False Complete this question by entering your answers in the tabs below Req 1 Req 2 Req 3AReq 3B Develop the standard cost for direct material and direct labor of a cutting board. (Round your answers to 2 decimal places.) Direct material Lumber Footpads 0.00 Direct labor Prepare and cut Assemble and finish Total standard unit cost $0.00 0.00

Explanation / Answer

STEPS TO FIND THE STANDARD COST PER UNIT OF A WOODEN CUTTING BOARD :

Standard cost of any item is the generally expected cost, in the production of that item. It is generally calculated beforehand, during the planning and budgeting phase of the product life cycle. The actual cost of the unit produced may or may not be the same as its standard cost.

The question refers to the wooden boards that are rejected after the prepare and cut stage. The cost of rejected material will be added in the cost sheet to overhead expenses. This cost does not affect the standard Direct labour and Direct material cost.

Table Showing Calculation of Standard Cost per unit of Chopping board $ $ Direct Material : Lumber (1.25 board feet * $3 per board foot) 3.75 Footpads (4 footpads per board * $0.05 per footpad) 0.20 3.95 Direct Labor : Prepare and cut (12 mins per board at $8 for 60 mins i.e. 12*8/60) 1.60 Assemble and finish (15*8/60) 2.00 3.60 Total Standard unit cost 7.55

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