Question: Broadwood Company is small manufacturer of wooden household item

Broadwood Company is small manufacturer of wooden household items. Ellen Broadwood, the firm’s controller, plans to implement a standard cost system for the company.
One of Broadwood’s products is a wooden cutting board. Each cutting board requires the following inputs:
Lumber: 0.4 metres @ $9.50 per metre
Rubber footpads: 4 @ $0.05 per footpad
Preparation and cutting of board: 12 minutes @ $12 per hour
Assembly and finishing: 15 minutes @ $15 per hour
The boards are inspected after they are cut. Because the lumber has imperfections, one in six boards cut is rejected and fully scrapped. Four rubber footpads are attached to each good cutting board. After the footpads are attached, the cutting board is finished.

Develop the standard cost for each good cutting board and prepare a standard cost card. The standard cost should identify the standard quantity, standard rate, and standard cost for each cost component.

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  • CreatedSeptember 19, 2013
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