Standard-setting process Canada Printing Group, Inc. (CPGI), has recentlybegun 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 of 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 five-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. Theresults of the time study are as follows:Press Operator Average Impressions per HourM. Lemieux . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,800G. LeFleur . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,700M. Richard. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,400P. Roy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,100P. Turgeon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,500Overall average . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,500Required:a. CPGI is considering five possibilities for setting the press standard for impressions per hour: 10,000, 9,000, 8,000, 7,400, or 6,500. Discuss the appropriateness, including a list of pros and cons, of setting the press standard at each level identified.b. What qualitative factors should CPGI consider when setting a standard for the same model press at other sites across Canada?c. Which level would you choose for the press standard at Pierre’s Lithographing of Montreal? Explain your answer.

Standard-setting process Canada Printing Group, Inc. (CPGI), has recentlybegun 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 of 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 five-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. Theresults of the time study are as follows:Press Operator Average Impressions per HourM. Lemieux . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,800G. LeFleur . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,700M. Richard. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,400P. Roy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,100P. Turgeon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,500Overall average . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,500Required:a. CPGI is considering five possibilities for setting the press standard for impressions per hour: 10,000, 9,000, 8,000, 7,400, or 6,500. Discuss the appropriateness, including a list of pros and cons, of setting the press standard at each level identified.b. What qualitative factors should CPGI consider when setting a standard for the same model press at other sites across Canada?c. Which level would you choose for the press standard at Pierre’s Lithographing of Montreal? Explain your answer.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

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 of 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 five-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:
Press Operator Average Impressions per Hour
M. Lemieux . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,800
G. LeFleur . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,700
M. Richard. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,400
P. Roy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,100
P. Turgeon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,500
Overall average . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,500
Required:
a. CPGI is considering five possibilities for setting the press standard for impressions per hour: 10,000, 9,000, 8,000, 7,400, or 6,500. Discuss the appropriateness, including a list of pros and cons, of setting the press standard at each level identified.
b. What qualitative factors should CPGI consider when setting a standard for the same model press at other sites across Canada?
c. Which level would you choose for the press standard at Pierre’s Lithographing of Montreal? Explain your answer.

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 6 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.