Cost Accounting and Control:
Exercises in Cost Analysis
Cost Accounting and Control
Exercises in Cost
Activity Timing and Labor Efficiency Variance
As a three-person team, choose a common daily activity (e.g., taking a
shower/bath, preparing a meal, doing homework).
Each team member times themselves performing the activity for two
days and develops a standard time for the team.
The team members then time themselves performing the same activity
for the next five days.
Using an assumed hourly wage rate of $12, calculate the labor
efficiency variance for the team.
Prepare a list of reasons for the variance.
Discuss how some of the variance could have been avoided.
Standard Cost for Raspberry Sherbet
Sure-Bet Sherbet's best-selling product is raspberry sherbet,
manufactured in 10-gallon batches.
Each batch requires 6 quarts of raspberries, with 1 quart discarded for
every 4 quarts of acceptable berries.
The standard direct labor sorting time to obtain 1 quart of acceptable
raspberries is 3 minutes.
The blending process requires 12 minutes of direct labor time per
batch.
Raspberries are purchased for $0.80 per quart, and other ingredients
cost a total of $0.45 per gallon.
Direct labor is paid $9.00 per hour, and the total cost of material and
labor required to package the sherbet is $0.38 per quart.
Develop the standard cost for the direct cost components of a 10-gallon
batch of raspberry sherbet, identifying standard quantity, standard
price/rate, and standard cost per batch for each direct cost component.
Discuss the possible causes of unfavorable material price variances and
identify the individual(s) responsible.
Discuss the possible causes of unfavorable labor efficiency variances
and identify the individual(s) responsible.
Material Price and Quantity Variances (DayTime Publishing
Company)
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
