Le Forestier, S.A., is a small company that processes wild mushrooms found in the forests of central France. For many
Le Forestier’s most popular product is dried chanterelle mushrooms, which are sold in small vacuum-packed jars. Each jar contains 15 grams of dried mushrooms. Fresh mushrooms are purchased for €60 per kilogram in bulk from individuals who gather them from local forests. (€stands for euro, the currency used in France, and a kilogram is 1,000 grams.) Because of imperfections in the mushrooms and normal spoilage, one-quarter of the fresh mushrooms are discarded. Fifteen minutes is the direct labor time required for inspecting and sorting per kilogram of fresh mushrooms. After sorting and inspecting, the acceptable mushrooms are flash-dried, which requires 10 minutes of direct labor time per kilogram of acceptable, sorted, and inspected fresh mushrooms. The flash-drying removes most of the moisture content of the mushrooms and therefore drastically reduces their weight.
Flash-drying reduces the weight of the acceptable mushrooms by 80%. As a consequence, a kilogram of acceptable fresh mushrooms yields only about 200 grams of dried mushrooms. After drying, the mushrooms are vacuum-packed in small jars and labels are applied.
Direct labor is paid at the rate of €12 per hour. The cost of the glass jars, lids, and labels is €10 per 100 jars. The labor time required to pack 100 jars is 10 minutes.
1. Develop the standard cost for the direct labor and materials cost components of a single jar of dried chanterelle mushrooms, including the costs of the mushrooms, inspecting and sorting, drying, and packing.
2. Jean Leveque wonders who should be held responsible—the purchasing manager or the production manager—for the materials variances for the chanterelle mushrooms.
a. Who should be held responsible for the materials price variances for the chanterelle mushrooms? Explain.
b. Who should be held responsible for the materials quantity variances for the chanterelle mushrooms? Explain.
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Question Posted: March 31, 2012 00:45:40