Please help me answer ONLY case 12.1 including all the questions

561 cantity of zurtan at a fixed price, neither of which can be altered. The price of zurtan is far above Each cigar roller selects an outer wrapper and inner leaves. These are cut and hand-rolled to the manufacturing cost. Aronowitz uses a standard cost system and at the beginning of the year estay desired tightness, size, and weight. Then, an outer leaf is rolled on. The cigar is trimmed and placed ashes the standard quantities of the various raw materials used to manufacture its coatings. Befrom in a wooden press to provide a symmetric shape. Employees are paid purely on a piece rate for good onowitz's fiscal year begins, management estimates that magna45 will have a standard price cigars produced. Inspectors discard defective cigars and employees are not paid for these cigars. $4 per gallon and zelon will have a standard price of $5 per gallon. Employees are assigned each day to one of three rolling rooms: panatella, corona, or churchill. The manager in charge of producing zurtan has decision-making authority to alter the mix of Each room is stocked with tobacco leaves. Each roller selects a batch of outer leaves and inner magna45 and zelon used to produce zurtan and is evaluated and rewarded based on two criteria. meeting delivery schedules of zurtan (including quantities and quality specifications) and materials leaves to use from the common tobacco stocks in the room. Sometimes rollers in the same room will share a tobacco pile and will often hand each other leftover pieces if they need some additional quantity variances of magna45 and zelon. filler. At the start of the day, each room is stocked with a preweighed amount of tobacco. At the end Required: of the day, any unused tobacco is weighed and returned to storage. Thus, management tracks the a. Before Aronowitz's fiscal year begins, determine the cost-minimizing (standard) quantities amount of tobacco used in each room each day. Cigars not meeting quality standards are sold to a of magna45 and zelon per batch of zurtan. bulk buyer. However, the roller is not paid for these cigars. Scrap tobacco pieces are sold to jobbers b. Soon after the fiscal year begins, the price of magna45 falls to $3 per gallon and the price for cigarettes. of zelon rises to $7 per gallon. What are the efficient (cost-minimizing) quantities of Domingo buys only the highest-quality tobacco from state communes that grow the tobacco for magna45 and zelon that Aronowitz should use to produce a batch of zurtan? government-run factories or Domingo. Since Domingo pays more than the government, the com- C. Aronowitz has a policy of never changing standards during the year. Standard prices and munes willingly sell their best tobacco to Domingo. standard quantities are changed only before the next fiscal year begins. What quantities of The following table summarizes production for the month of March. magna45 and zelon will the zurtan production manager choose after the price of magna 45 falls to $3 per gallon and zelon rises to $7 per gallon? Panatella Corona Churchill d. Offer an explanation as to why Aronowitz chooses not to change standards after the fiscal 1 15,000 60.000 year begins. Cigars produced 125,000 Actual labor 4,900 7,000 5,600 Actual tobacco used (grams) 740,000 1,360,000 1,400,000 Domingo purchased 3.5 million grams of tobacco for $805,000. Required: Cases a. The piece rate for each cigar type is based on the standard labor minutes for each cigar and a $3.00 per hour wage rate. Calculate the piece rate per cigar paid for panatellas, coronas, Case 12-1: Domingo Cigars and churchills. To generate needed foreign exchange, the Cuban government entered into a joint venture with b. Calculate the tobacco price variance. Domingo Cigars of Spain. The joint venture manufactures Domingo Cigars in Cuba using Cuban c. Calculate the tobacco quantity variances for each type of cigar. tobacco and employees. Domingo and the Cuban government split all profits evenly. The contract calls for all financial transactions, including employee salaries, to be in U.S. dollars. d. Calculate the labor efficiency variances for each type of cigar. Spanish managers came to Cuba and opened a cigar factory. All cigars are handmade. Domingo e. Analyze the quantity and labor efficiency variances calculated in parts (c) and (d). What hires the best Cuban cigar makers, who formerly worked for the Cuban government making cigars. managerial implications do you draw from these variances? The average cigar roller makes $2.50 per hour in a government factory. Domingo decides to set the f. What suggested changes would you recommend to Domingo Cigars's management? Be effective wage rate at $3.00 per hour to attract the best employees, but will pay them piece rates. specific. Domingo makes three types of cigars: panatellas, coronas, and churchills. All three use the same type of tobacco, but in varying amounts. Among the many management practices installed by Domingo are an employee incentive system and a standard cost system. Because the time to roll Case 12-2: Rust Belt Mufflers Dr. Madison, inventor and owner of Madison Corrosion Treatment, has discovered that ordinary each type of cigar varies, employees are paid different amounts for each cigar type. The following standards are established for production. mufflers and pipes, when treated with his patented process, will become permanently impervious to corrosion. To reap the rewards from his ingenuity, he has opened Rust Belt Mufflers, a chain of 30 corporate-owned muffler shops. Rust Belt unconditionally warrants all of its muffler and pipe installations for the life of the vehicle. From minor adjustments to complete replacement, a Rust Belt customer must be a satisfied customer! Panatella Corona Churchill Although Rust Belt's service has become the rage of the Great Lakes, profits have been unim- Labor time (minutes) pressive. Simon, one of Madison's employees, scolds his boss: "Here you are, with the greatest com- Grams of tobacco per cigar 3 petitive advantage in the history of muffler service, doing no better than any of your rivals." Madison Effective labor rate (per hour) 6 10 $3.00 20 retorts, "I'm devoted to science, not business. As long as the enterprise is profitable, I will not Tobacco price (per gram) $3.00 $3.00 interfere with my shop managers." Simon says that the profitability problem is due to squandering $0.20 $0.20 $0.20 of resources by shop managers. The product's superior price, strong demand, and Madison's policy