Question

Quincy Farms is a producer of items made from farm products that are distributed to supermarkets. For many years, Quincy's products have had strong regional sales on the basis of brand recognition. However, other companies have been marketing similar products in the area, and price competition has become increasingly important. Doug Gilbert, the company's controller, is planning to implement a standard costing system for Quincy and has gathered considerable information from his coworkers on production and direct materials requirements for Quincy's products. Doug believes that the use of standard costing will allow Quincy to improve cost control and make better operating decisions.

Quincy's most popular product is strawberry jam. The jam is produced in 10-gallon batches, and each batch requires six quarts of good strawberries. The fresh strawberries are sorted by hand before entering the production process. Because of imperfections in the strawberries and spoilage, one quart of strawberries is discarded for every four quarts of acceptable berries. Three minutes is the standard direct labor time required for sorting strawberries in order to obtain one quart of strawberries. The acceptable strawberries are then processed with the other ingredients: processing requires 9 minutes of direct labor time per batch. After processing, the jam is packaged in quart containers. Doug has gathered the following information from Joe Adams, Quincy's cost accountant, relative to processing the strawberry jam.

1. Quincy purchases strawberries at a cost of $0.80 per quart. All other ingredients cost a total of $0.43 per gallon.
2. Direct labor is paid at the rate of $8.00 per hour.
3. The total cost of direct material and direct labor required to package the jam is $0.44 per quart

Joe has a friend who owns a strawberry farm that has been losing money in recent years. Because of good crops, there has been an oversupply of strawberries, and prices have dropped to $0.50 per quart. Joe has arranged for Quincy to purchase strawberries from his friend's farm in hopes that the $0.80 per quart will put his friend's farm in the black.

Required:

2. Develop the standard cost sheet for the prime costs of a 10-gallon batch of strawberry jam. Do not round intermediate calculations. If required, round your answers to the nearest cent.

Quincy Farms
Standard Cost Sheet
Strawberry Jam - 10-Gallon Batch
Strawberries	$
Other ingredients
Sorting labor
Processing labor
Packaging
Total standard cost	$

Answer 1

Quincy Farms
Standard Cost Sheet
Strawberry Jam - 10-Gallon Batch
	standard quantity	standard cost	Total cost for batch
Strawberries	7.5Quarts [note 1]	0.80$ [note 2]	$6.00 [7.5*0.80]
Other ingredients	10 Gallons	$0.43 per gallon	$4.3 [10*0.43]
Sorting labor	18 minutes [note 3]	$0.133	$2.40 [18*0.133]
Processing labor	9 minutes	$0.133	$1.20[9minutes*0.133]
Packaging	40 Quart [Note 4]	$0.44	$17.60[40*0.44$]
Total standard cost		[6+4.3+2.4+1.2+17.60]	$31.5

Note 1

strawberry required per gallon:

10 Gallon batch require 6 Quart of good strawberries

However when 5 quart of strawberries are purchased 1 quart is discarded and 4 quart of good strawberries are accepted.

purchase    accepted

5 quart         4quart

?                   6quart

so to get 6 quart of good strawberry , total strawberry required are [6*5]/ = 7.5Quarts

Note 2

we will consider rate of $0.80 for strawberries as standard cost as it is available.

sorting labor Note 3

6quart of good berries have to be sorted.

3minutes is required for 1 quart of strawberry

so total standard labor time for sorting is = 6quart*3minutes = 18minutes

labor rate per minute = $8per hour /60 minutes = 0.133$ per minute

PACKAGING COST NOTE 4

1 gallon = 4quatrs

10 Gallon = 40Quarts have to be packaged.