Sal Amato operates a residential landscaping business in an affluent suburb of St. Louis. In an effort to provide quality service, he has concentrated solely on the design and installation of upscale landscaping plans (e.g., trees, shrubs, fountains, and lighting). With his clients continually requesting additional services. Sal recently expanded into lawn maintenance, including fertilization. The following data relate to his first year e experience with 59 fertilization clients: Each client required six applications throughout the year and was billed $44.00 per application. Two applications involved Type I fertilizer, which contains a special ingredient for weed control. The remaining four applications involved Type II fertilizer. Sal purchased 5.400 pounds of Type I fertilizer at $0.57 per pound and 10,400 pounds of Type 17 fertilizer at $0.44 per pound. Actual usage amounted to 3.790 pounds of Type I and 8.000 pounds of Type 17.A. part-time employee was hired to spread the fertilizer. Sal had to pay premium wages of $11.90 per hour because of a very tight labor market: the employee logged a total of 173 hours at client residences. Based on previous knowledge of the operation, articles in trade journals, and conversations with other landscapers. Sal established the following standards: Fertilizer purchase price per pound: Type 7. $0.54: Type 77. $0.46Fertilizer usage: 44 pounds per application Typical hourly wage rate of landscape personnel: $9.40Labor time per application: 40 minutes The operation did not go as smoothly as planned, with customer complaints actually much higher than expected. Compute the efficiency variance. Zira Co. reports the following production budget for the next four months. new, April May June July Production (units) 632 660 666 646 Each finished unit requires four pounds of raw materials and the company wants to end each month with raw materials inventory equal to 30% of next month's production needs. The beginning raw materials inventory for April was 758 pounds. Assume direct materials cost $4 per pound. Prepare a direct materials budget for April. May, and June.

Sal Amato operates a residential landscaping business in an affluent suburb of St. Louis. In an effort to provide quality service, he has concentrated solely on the design and installation of upscale landscaping plans (e.g., trees, shrubs, fountains, and lighting). With his clients continually requesting additional services. Sal recently expanded into lawn maintenance, including fertilization. The following data relate to his first year e experience with 59 fertilization clients: Each client required six applications throughout the year and was billed $44.00 per application. Two applications involved Type I fertilizer, which contains a special ingredient for weed control. The remaining four applications involved Type II fertilizer. Sal purchased 5.400 pounds of Type I fertilizer at $0.57 per pound and 10,400 pounds of Type 17 fertilizer at $0.44 per pound. Actual usage amounted to 3.790 pounds of Type I and 8.000 pounds of Type 17.A. part-time employee was hired to spread the fertilizer. Sal had to pay premium wages of $11.90 per hour because of a very tight labor market: the employee logged a total of 173 hours at client residences. Based on previous knowledge of the operation, articles in trade journals, and conversations with other landscapers. Sal established the following standards: Fertilizer purchase price per pound: Type 7. $0.54: Type 77. $0.46Fertilizer usage: 44 pounds per application Typical hourly wage rate of landscape personnel: $9.40Labor time per application: 40 minutes The operation did not go as smoothly as planned, with customer complaints actually much higher than expected. Compute the efficiency variance. Zira Co. reports the following production budget for the next four months. new, April May June July Production (units) 632 660 666 646 Each finished unit requires four pounds of raw materials and the company wants to end each month with raw materials inventory equal to 30% of next month's production needs. The beginning raw materials inventory for April was 758 pounds. Assume direct materials cost $4 per pound. Prepare a direct materials budget for April. May, and June.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 15E

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