CHAPTER 9
Standard Costing: A Functional-Based Control Approach
COLLABORATIVE LEARNING EXERCISE SOLUTION
1. By using a standard costing system with price and quantity standards for each input, Tasty Apple
can increase control of the manufacturing inputs. For example, since managers have the most con-
2. The engineering standards are ideal standards. The president’s concern probably reflects doubt
that the direct labor standards can be achieved. If workers are pressured to achieve perfection,
3. Standard cost sheet (for one box of chips):
Direct materials:
Apples (17 lbs. @ $0.245)a ……………………………………….. $ 4.165
Cooking oil (52.8 oz. @ $0.04) ………………………………….. 2.112
Bags (16 @ $0.12) ……………………………………………………. 1.920
Continued
aPounds per box = 16 4 4.25/16 = 17; Price per pound = $0.245 less scrap value; scrap per
box = 16 (17.0 ounces – 16.2 ounces) = 12.8 ounces. Scrap value/ounce = $0.24/16 = $0.015
bNumber of boxes/year = 9,200,000/16 = 575,000 boxes
Hours/box:
Apple inspection: (3,150 1.1)/575,000
Chip inspection: (12,000 1.1)/575,000
4. MUV = (AQ – SQ)SP