Case 14.25
Standard-setting process Canada Printing Group, Inc. (CPGI), has recently begun the process of acquiring small to medium-size local and regional printing firms across the country to facilitate its corporate strategy of becoming the low-cost provider of graphic arts and printing services in Canada. To emphasize the importance of cost control, CPGI uses a standard cost system in all its printing plants. Most of the smaller firms that CPGI has acquired have never used a standard cost system before. Therefore, when CPGI acquires a new printing plant, its first task is to evaluate the operation and set standards for the printing presses.
One such recent acquisition was Pierre's Lithographing of Montreal. Pierre has a 5-year-old, 40-inch, four-color press that is in very good condition. Specifications provided by the manufacturer of the press indicate that under ideal conditions, the press should be able to produce 10,000 impressions per hour. CPGI has many similar presses throughout its organization, and in most locations the standard has been set at 9,000 impressions per hour. Many of Pierre's jobs have been for smaller run quantities, which means that the presses are stopped many times during the day as the press operator sets up the press for each new job.
Additionally, the jobs that Pierre attracts are very complex and require high-quality results. Pierre suggests that even if everything ran perfectly throughout a day, the most he could expect the press to run would be 8,000 impressions per hour.
As usual with new acquisitions, CPGI has prepared a time study of the press for the past six months to determine how productive each of the operators has been. The results of the time study are as follows:
Required:
The case is about the standard-setting process and presents 5 different possibilities to consider for choosing a standard performance rate (impressions per hour) for a printing press. From the 5 options presented, please choose one option that you can support and one option that you cannot support and then discuss your reasons on each side of the argument.
Answer:-
10000 impressions for every hour
Pros:This would result in a low standard expense for each impression with any troublesome fluctuation.
This subsequent would be an indication of the expense are not accomplishing perfect determined conditions.
Cons:Actually,this standard is so implausible and the as of now produced negative fluctuations won't at any rate propel the bosses just as representatives to achieve the execution target.
Case 14.25 Standard-setting process Canada Printing Group, Inc. (CPGI), has recently begun the process of acquiring...
For many years, Sinclair Graphic Design has provided design and digital printing services for indoor banners. The nylon banners, which come in a standard size, are used for a variety of purposes, including trade shows, sporting events, and other promotional activities. Three years ago, the company introduced a second printing and production service for outdoor banners that has become increasingly popular. The outdoor banners are a more complex product than the indoor banners, requiring weatherproof vinyl materials and a different...
Vitex, Inc. manufactures a popular consumer product and it has provided the following data excerpts from its standard cost system: Inputs (1) Standard Quantity or Hours (2) Standard Price or Rate Standard Cost (1) × (2) Direct materials 2.10 pounds $ 16.80 per pound $ 35.28 Direct labor 1.00 hours $ 15.40 per hour $ 15.40 Variable manufacturing overhead 1.00 hours $ 9.20 per hour $ 9.20 Total standard cost per unit $ 59.88 Total Variances Reported Standard Cost* Price...
Vitex, Inc. manufactures a popular consumer product and it has provided the following data excerpts from its standard cost system: Inputs (1) Standard Quantity or Hours (2) Standard Price or Rate Standard Cost (1) × (2) Direct materials 2.30 pounds $ 16.20 per pound $ 37.26 Direct labor 1.00 hours $ 15.20 per hour $ 15.20 Variable manufacturing overhead 1.00 hours $ 9.20 per hour $ 9.20 Total standard cost per unit $ 61.66 Total Variances Reported Standard Cost* Price...
Vitex, Inc. manufactures a popular consumer product and it has provided the following data excerpts from its standard cost system: Inputs(1) Standard Quantity or Hours(2)StandardPriceor RateStandardCost(1) × (2)Direct materials2.40pounds$16.70per pound$40.08Direct labor1.00hours$15.30per hour$15.30Variable manufacturing overhead1.00hours$9.30per hour$9.30Total standard cost per unit$64.68 TotalVariances ReportedStandardCost*Priceor RateQuantity orEfficiencyDirect materials$681,360$12,412F$33,400UDirect labor$260,100$3,600U$15,300UVariable manufacturing overhead$158,100$4,700F$?†U*Applied to Work in Process during the period. The company's manufacturing overhead cost is applied to production on the basis of direct labor-hours. All of the materials purchased during the period were used in production. Work in...
You have recently accepted a position with Vitex, Inc., the manufacturer of a popular consumer product. During your first week on the job, the vice president has been favorably impressed with your work. She has been so impressed, in fact, that yesterday she called you into her office and asked you to attend the executive committee meeting this morning for the purpose of leading a discussion on the variances reported for last period. Anxious to favorably impress the executive committee,...
Lovell Computer Parts Inc. is in the process of setting a selling price on a new component it has just designed and developed. The following cost estimates for this new component have been provided by the accounting department for a budgeted volume of 50,000 units. Per Unit Total Direct materials $52 Direct labor $22 Variable manufacturing overhead $18 Fixed manufacturing overhead $650,000 Variable selling and administrative expenses $16 Fixed selling and administrative expenses $400,000 Lovell Computer Parts management requests that...
Vitex, Inc. manufactures a popular consumer product and it has provided the following data excerpts from its standard cost system:The company's manufacturing overhead cost is applied to production on the basis of direct labor-hours. All of the materials purchased during the period were used in production. Work in process inventories are insignificant and can be ignored. Required: 1. How many units were produced last period? 2. How many pounds of direct material were purchased and used in production? 3. What was the actual cost...
CASE 8.1 ACTIVITY-BASE D ANALYSIS AND BUDGETING. Doubtfire Press produces children's books for national distribution through mainstream distributors such as Baker and Taylor. It has recently decided to implement activity-based analysis and ABB to help it gain control over its publication costs. There are a number of activities and professionals involved in publishing a children's book, as summarized in the table below. MANAGEMENT ACCOUNTING R EIGHT Activity Individual Writes the 32 pages of story line Writer Creates the art for...
Rocket Print Publishing – Case Analysis 20 points Rocket Print is a successful printing and publishing company in its third year. The University of Toledo has been outsourcing more and more of its printing needs. Rocket Print has managed to secure UT as a customer and has survived the challenges of new work that UT demanded in a very short time. Much of this work is to support the printing of customized eBooks. As the first term progressed with Rocket...
Case 5-4 Shouldice Hospital in Canada is widely known for one thing—hernia repair! In fact, that is the only operation it performs, and it performs a great many of them. Over the past two decades this small 102-bed hospital has averaged 7,000 operations annually. Last year, it had a record year and performed nearly 7,500 operations. A hernia repair operation at Shouldice Hospital is performed by one of the 12 full-time surgeons assisted by one of seven part-time assistant surgeons....